YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities fell on Friday amid strong demand.
The central bank’s securities fetched bids amounting to P221.45 billion on Friday, higher than the P120-billion offer and the P129.382 billion in tenders for the P100 billion auctioned off on Jan. 3.
Broken down, tenders for the 28-day BSP bills reached P101.477 billion, well above the P50-billion offer and the P45.022 billion in bids for the P60 billion placed on the auction block in the prior week.
Banks asked for yields ranging from 5.84% to 5.925%, lower and narrower than the 5.849% to 6.1% band previously. This caused the average rate of the one-month securities to drop by 5.41 basis points (bps) to 5.8618% from 5.9159%.
Meanwhile, bids for the 56-day bills amounted to P119.973 billion, higher than the P70-billion offering and the P84.36 billion in tenders for a P40-billion offer the previous week.
Accepted rates for the two-month tenor were from 5.875% to 5.99%, lower than the 5.98% to 6.05% margin seen in the prior auction. With this, the average rate of the securities declined by 8.28 bps to 5.9439% from 6.0267%.
The central bank increased last week’s total offering of BSP bills (BSPB) compared to the volume put up for auction previously and fully awarded both tenors amid strong demand, BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
“Total tenders received rose to P221.45 billion (from P129.382 billion) and resulted in bid-to-cover ratios of 2.03 times for the 28-day BSPB and 1.71 times for the 56-day BSPB,” he said.
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 market rates.
The BSP bills were calibrated to not overlap with the Treasury bill and term deposit tenors also being offered weekly.
Data from the central bank showed that around 50% of its market operations are done through the short-term BSP bills.
Short-term instruments offer more stability and predictability, the BSP earlier said. These are also considered “high-quality liquid assets” and grant more flexibility for banks versus the term deposits, which are not tradable. — Luisa Maria Jacinta C. Jocson
