YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities inched higher on Monday, with both tenors being oversubscribed.
The BSP securities auctioned off on Monday fetched bids amounting to P124.432 billion, higher than the P120-billion offer but below the P153.009 billion in tenders for the P130-billion offering at the previous auction. The central bank made a full award of the bills.
Tenders for the 28-day BSP bills reached P40.817 billion, slightly above the P40-billion offer but lower than the P41.684 billion in bids for the P50 billion placed on the auction block on April 11. The central bank made a full P40-billion award of the tenor.
Banks asked for yields ranging from 5.65% to 5.849%, narrower than the 5.645% to 5.85% band previously. This caused the average rate of the one-month securities to edge up by 0.08 basis point (bp) to 5.779% from 5.7782%.
Meanwhile, bids for the 56-day bills amounted to P83.615 billion, higher than the P80-billion offering but below the P111.325 billion in tenders for same volume offered at the previous auction. The BSP likewise made a full P80-billion award of the two-month securities.
Accepted rates for the two-month tenor were from 5.65% to 5.8%, narrower than the 5.6125% to 5.816% margin seen in the prior auction. With this, the average rate of the securities rose by 1.18 bps to 5.7548% from 5.743%.
The auction date for the BSP bills was adjusted due to the Holy Week holidays last week.
The central bank decreased the total volume offering for BSP bills from the previous week, it said in a statement.
“Total tenders received amounted to P124.432 billion, lower than P153.009 billion in the previous week. The resulting bid-to-cover ratios were 1.02 times for the 28-day tenor and 1.05 times for the 56-day tenor,” it 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 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 central bank said.
The central bank securities 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.
The BSP bills are considered high-quality liquid assets for the computation of banks’ liquidity coverage ratio, net stable funding ratio, and minimum liquidity ratio.
They can also be traded on the secondary market. — Luisa Maria Jacinta C. Jocson
