Local debt risk up amid Saudi oil field attack

The Bureau of the Treasury on Monday sold only more than half of the offering for 364-day T-bills as its rate rose amid investor concerns the Saudi Arabia oil field attacks could impact global prices in the long term.

The Treasury capped the rate for 364-day IOUs at 3.666 percent, up 0.7 basis points from 3.659 percent previously, allowing the sale of just P3.983 billion out of the P6-billion offering.

Meanwhile, the average rates fell for the benchmark 91-day and 182-day treasury bills to 3.037 percent (down 11.2 basis points from 3.149 percent during the previous auction) and 3.42 percent (down 0.9 bp from 3.429 percent), respectively.

The Treasury awarded all P4 billion and P5 billion it offered for the three- and six-month debt paper, respectively.

National Treasurer Rosalia V. de Leon attributed the lower rates to recent pronouncements of Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno indicating there was room for the Monetary Board to further cut not only interest rates but also banks’ reserve requirement ratio.

While total bids across the three tenors totaled P35.1 billion or over two times the P15-billion total offering, Monday’s auction raised only P12.983 billion.

“After the attack on the oil fields of Saudi Arabia over the weekend, the Governor [Diokno] also said that they will be monitoring developments, and this event will also be [an additional] input in their discussions during the policy meeting next week,” de Leon said.

De Leon noted Saudi Arabia already announced it would restore normal oil production, which could mean rates for longer-dated government securities locally were expected to consolidate in the near term.