Yields on BSP bills drop

YIELDS on the central bank’s short-term securities declined on Friday even as the two-month tenor was undersubscribed.

The Bangko Sentral ng Pilipinas (BSP) securities fetched bids amounting to P195.495 billion on Friday, higher than the P190-billion offer and the P181.216 billion in tenders for the P150 billion auctioned off in the previous week. However, the central bank only awarded P182.336 billion in bills as the two-month tenor went undersubscribed.

Broken down, tenders for the 27-day BSP bills reached P81.659 billion, above the P70-billion offering and the P41.55 billion in bids for the P50 billion placed on the auction block a week ago. The BSP made a full P70-billion award of the tenor.

Banks asked for yields ranging from 5.79% to 5.8575%, lower than the 5.82% to 5.8895% band seen a week earlier. This caused the average rate of the one-month securities to drop by 4.06 basis points (bps) to 5.8222% from 5.8628% previously.

Meanwhile, bids for the 55-day bills amounted to P113.836 billion, below the P120-billion offering as well as the P139.666 billion in tenders for a P100-billion offer the week prior. The central bank made a partial P112.336-billion award of the two-month securities.

Accepted rates for the two-month tenor were from 5.74% to 5.85%, wider than the 5.82% to 5.849% margin seen a week ago. With this, the average rate of the securities declined by 2.1 bps to 5.8134% from 5.8344% logged in the prior auction.

The tenors of the BSP bills offered on Friday were adjusted from the usual 28-day and 56-day maturities due to holidays.

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 BSP bills.

Short-term instruments offer more stability and predictability, the BSP has said. These are also considered high-quality liquid assets, giving banks more flexibility. — Luisa Maria Jacinta C. Jocson