BSP securities fetch lower yields

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) one-month securities dropped further on Friday as the offer was oversubscribed for a third straight week.

The 28-day BSP bills attracted bids amounting to P132.25 billion, above the P90 billion auctioned off but slightly lower than the P137.421 billion in tenders for the same offer volume on Dec. 5. The central bank made a full P90-billion award of the securities.

Accepted yields for the one-month tenor were from 4.7125% to 4.89%, wider and lower than the 4.9% to 4.99% band fetched the previous week. This brought the weighted average accepted rate of the 28-day papers to 4.8298%, down 11.63 basis points from 4.9461% a week prior.

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

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