BSP bills’ average yield edges up despite oversubscription

THE Bangko Sentral ng Pilipinas’ (BSP) one-month securities fetched a higher average rate on Friday despite strong demand as it made a partial award to cap the rise in accepted yields.

The 28-day BSP bills attracted bids amounting to P101.405 billion, above the P90 billion auctioned off and the P67.024 billion in tenders for the same offer volume a week prior. However, the central bank awarded only P81.405 billion in papers.

Accepted yields were from 4.968% to 5.045%, narrower than the 4.95% to 5.05% band seen in the previous auction. With this, the weighted average accepted rate of the 28-day papers inched up by just 0.66 basis point to 5.0106% from 5.0040%.

The BSP did not offer the 56-day tenor for the fifth consecutive week. It last auctioned off both the 28-day and 56-day BSP bills on 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.

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.

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.

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