BSP bills fetch lower yields as demand surges

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities declined on Friday as banks swamped the offering.

Bids for the 28-day BSP bills amounted to P117.7 billion, nearly triple the P40 billion auctioned off and the P54.326 billion in bids for the same offer volume last Monday.

“The 28‑day BSP bill (BSPB) auction saw strong demand,” the central bank said in a statement on Friday. “At the auction held on April 10, 2026, total tenders for the 28-day BSPB rose from P54.3 billion in the previous week to P117.7 billion.”

With this, the bid-to-cover ratio jumped to 2.9425 times from the 1.3582 ratio seen during the previous auction.

As a result, the central bank made a full award of its P40-billion offer.

Accepted rates were from 4.333% to 4.443%, wider and lower than the 4.475% to 4.58% band seen in the previous auction. This brought the weighted average accepted rate of the one-month bills to 4.3676%, 15.89 basis points lower than the 4.5265% last auction.

The BSP has not auctioned off the 56-day bills since Nov. 3.

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

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.

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

In its February 2026 Monetary Policy Report, the central bank said it has limited its BSP securities offerings to a single tenor to rationalize its liquidity operations and focus on tenors that would boost monetary policy transmission.

As of mid-February, the central bank’s monetary operations have siphoned off P1.2 trillion in liquidity from the market. Of this, 28.5% was absorbed through BSP securities, while 44.4% were done through overnight reverse repurchase facility, 18.2% via the overnight deposit facility, and 9% from the term deposit facility. — Katherine K. Chan