YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities dropped on Friday as the offer was met with strong demand.
The central bank’s short-term securities fetched bids amounting to P153.359 billion last week, higher than the P100-billion offer and the P119.385 billion in tenders for the P110 billion auctioned off the prior week. The BSP made a full award of the bills.
Broken down, tenders for the 28-day BSP bills reached P66.805 billion, well above the P40-billion offer and the P42.285 billion in bids for the P50 billion placed on the auction block a week earlier. The central bank made a full P40-billion award of the one-month bills.
Banks asked for yields ranging from 5.414% to 5.4585%, narrowing from the 5.299% to 5.525% band seen in the previous week. This caused the average rate of the one-month securities to decline by 2.46 basis points (bps) to 5.4408% from 5.4654% the week prior.
Meanwhile, bids for the 56-day bills amounted to P86.554 billion, higher than the P60-billion offering and the P77.1 billion in tenders for the same volume auctioned off the previous week. The BSP fully awarded P60 billion in two-month papers.
Accepted rates for the two-month tenor were from 5.3975% to 5.485%, also narrower than the 5.32% to 5.515% margin seen in the prior auction. With this, the average rate of the securities fell by 4.25 bp to 5.454% from 5.4965%.
The central bank reduced Friday’s total offering of BSP bills (BSPB) compared to the previous week, it said in a statement.
“As a result, the 28-day and 56-day BSPB auctions were oversubscribed by 1.67 times and 1.44 times, respectively,” 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 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 its short-term securities.
The BSP bills are considered high-quality liquid assets. They can also be traded on the secondary market. — Luisa Maria Jacinta C. Jocson
