BSP securities fetch lower average rate

THE BANGKO SENTRAL ng Pilipinas’ (BSP) one-month securities fetched a lower average yield on Friday as the offer attracted strong demand.

The 28-day BSP bills fetched bids amounting to P137.421 billion on Friday, exceeding the P90 billion on offer and the P101.405 billion in tenders the prior week. The central bank made a full award of its offering.

Accepted yields for the tenor ranged from 4.9% to 4.99%, wider and lower than the 4.95% to 5.05% band logged a week ago. This caused the weighted average accepted rate of the 28-day papers to decline by 6.45 basis points to 4.9461% from 5.0106%.

“The 28-day BSP bill rate declined,” the central bank said in a statement. “The BSP maintained the total offer volume at P90 billion, while total tenders reached P137.4 billion, resulting in a bid-to-cover ratio of 1.53x.”

This was higher than the bid-to-cover ratio of 1.13 times seen in the previous offering.

The BSP has not auctioned off the 56-day bills for over a month or since Oct. 24.

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to better guide short-term market rates towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission, the regulator has said.

In August, BSP Governor Eli M. Remolona, Jr. said they are gradually shifting away from the issuance of short-term papers to manage liquidity as they want to boost activity in the money market.

The central bank started auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.

Data from the central bank showed that around 50% of its market operations are done through its short-term securities. — K.K. Chan