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Egypt Sells Most Repos in 4 Months as Yields Rise Amid Unrest

Nov. 27 (Bloomberg) -- Egypt sold 14.2 billion Egyptian pounds ($2.3 billion) of seven-day repurchase agreements today, the most in four months, after domestic debt yields advanced amid growing opposition to President Mohamed Mursi.

Banks will pay 9.75 percent on the contracts, which allow holders of government notes to sell them back to the central bank in order to access short-term funds, according to the regulator’s data on Bloomberg. The central bank had made available 18 billion pounds of the agreements, the most since July 24. Egypt hasn’t offered 28-day repos, introduced in July to help ease pressure on bank funding, since Oct. 1.

The North African nation has relied on local banks to buy debt since last year’s uprising deterred foreign investors. Lenders demanded higher yields this week after protests broke out against against a Nov. 22 presidential decree that placed Mursi’s decisions above judicial review and protects a panel drafting the nation’s new constitution from court challenges. Secularists and youth groups are massing for rallies in Tahrir Square today against the edict.

The government yesterday canceled an auction for five-year and seven-year treasury bonds without giving a reason. The average yield on nine-month treasury bills rose 30 basis points, or 0.3 percentage point, to a six-week high of 13.19 percent.

The Egyptian pound, subject to a managed float, was little changed at 6.1052 a dollar at 2:30 p.m. in Cairo after losing as much as 0.3 percent yesterday, the most since September 2011. The yield on the nation’s 5.75 percent dollar-denominated bonds due in April 2020 retreated six basis points to 5.19 percent, according to data compiled by Bloomberg.

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