Egypt CBank sells $1.1B in Tre

By TAREK EL-TABLAWY AP Business Writer

CAIRO (AP) - Egypt's Central Bank on Sunday sold 6.5 billion pounds ($1.1 billion) in Treasury bills, still forced to pay high yields despite the easing of tensions after President Hosni Mubarak ceded control of the country to the military.

The auction of 3 billion pounds in three-month bills and 3.5 billion in 266-day bills was the latest push by the Egyptian government to raise funds as the political crisis battered the country's economy.

It was the first such auction since Mubarak left office on Thursday after 18 days of protests in which hundreds of thousands demanded his ouster.

Yields for the 91-day bills averaged almost 10.95 percent while the 266-day T-bill averaged almost 11.68 percent, slightly lower than previous sales last week.

"We expected the market to ease a bit because the situation was much better than last week," said Khalil El-Bawab, head of fixed income at EFG Hermes, the Cairo-based Mideast investment bank. Yields "will further ease in the coming few weeks once the situation is more stable."

Regional markets, meanwhile, posted moderate gains in the first day of trade in much of the Arab world since Mubarak's departure from office.

Dubai's Financial Market closed up 0.36 percent at 1,604.15 points while Abu Dhabi's exchange posted a 0.63 percent gain to reach 2,727.71 points. Qatar and Oman's stock exchanges closed up 0.74 percent and 0.58 percent, respectively.

"What happened in Egypt had an impact," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi Fransi, referring to the regional gains. "It's sentiment-based, with the exit of Mubarak."

Before of Sunday's Treasury bill sale, the Central Bank sold 16.5 billion pounds in various T-bills in two separate auctions last week, drawing local buyers. However, international investors steered clear of Egypt exposure amid the chaos and uncertainty linked to the protests that led to Mubarak's resignation late Friday.

Few figures have emerged to quantify the scope of Egypt's economic and financial losses since the unrest began on Jan. 25. Investment bank Credit Agricole had estimated in a report that the unrest cost the country $310 million per day as factories ground to a halt, banks were closed and businesses were shuttered.

But in an indication of how one major company had fared, the chairman of EgyptAir said Sunday that the national carrier lost 80 percent of its projected revenues for the duration of the crisis after being forced to cancel three quarters of its flights.

"We have started an urgent plan to cut expenses and limit the number of flights, or cancel some" that have drawn few passengers, said Hussein Massoud, the company's chairman. He did not say how much the company had lost in revenues, or provide other details.

The company had scheduled only 40 flights for Sunday, 75 percent of which were international departures, compared to its usual schedule of 145 international and domestic flights.

EgyptAir had been forced to cancel as many as 75 percent of its flights in the first two weeks of the crisis as a restrictive curfew, coupled with the growing lawlessness in the capital, made it difficult for the company to field enough crew for its aircraft.

The protests were fueled in large part by Egypt's economic woes, including poverty, a widening income gap, corruption, a shortage of affordable housing and food price inflation of 17 percent per year.

Even as the demonstrations against Mubarak wound down, new challenges emerged as workers went on strike.

In the latest such moves, employees at two public sector banks in Cairo went on strike demanding better pay. In addition, about 2,000 policemen demonstrated in front of the Interior Ministry, complaining about the gap in salaries between officers and enlisted.

Egypt's state news agency said that in light of the strikes, the Central Bank decided it will suspend work in banks on Monday. Banks will reopen on Wednesday, because Tuesday is also a public holiday.

The unrest has worried Egyptian officials. To minimize potential losses, the country's stock exchange has been closed for the past two weeks.

On Saturday, Egyptian Exchange officials announced a delay of its opening to Feb. 16. It had been slated to restart on Sunday with new guidelines including temporarily halting trade if the broader EGX100 index shifts 5 percent or 10 percent.

The exchange's benchmark EGX30 index had lost almost 17 percent in two sessions before closing down on Jan. 28. Finance Minister Samir Radwan had said the losses eclipsed those sustained by the exchange during the global financial meltdown.