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Tue 15 Mar 2016 01:55 PM

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Doha Bank says won't bid in Qatar T-bill auction

Central bank has cancelled auction in the last several months because banks were demanding high yields

Doha Bank says won't bid in Qatar T-bill auction
R Seetharaman, chief executive of Doha Bank.

The chief executive of Doha Bank said on Tuesday his bank would not bid in a Treasury bill auction which the central bank might hold next month because higher yields were available.

"As far as I'm concerned, I'm not opting for it at this point," R Seetharaman told reporters on the sidelines of a financial conference.

"Unless I have additional liquidity, why should I bid? I have better yields than others. Banks who have excess liquidity can pocket these kind of instruments. As far as I'm concerned, I'm not opting for it at this point."

The central bank has cancelled its monthly T-bill auction in the last several months because banks were demanding high yields; liquidity in the banking system has tightened since mid-2015 as lower oil and gas prices have cut flows of new money into the economy.

The three-month Qatar interbank offered rate jumped to 1.46 percent in mid-February from 1.13 percent at the end of last June, though it has since fallen back slightly from its high.

Seetharaman said his bank remained willing to fund bond issues by the government: "Of course, if Qatar comes out with it, it is the best risk I can afford to have."

There has been talk in the markets that the government may issue sovereign bonds in the next few months. Asked about this, Seetharaman said: "There are indications...that the government will borrow. We don't know the timing, the type of currency or form, but banks are anticipating additional liquidity...

"To not inflate the economy, to maintain parity in terms of your fiscal prudence, the government has to borrow and put additional money in the till, otherwise you will have stress in the medium- and long term."

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