YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday, with the offer attracting strong demand even as the auction volume was hiked slightly.
The BSP bills fetched bids amounting to P136.913 billion, well above the P110-billion offer and the P86.339 billion in tenders for the P100 billion auctioned off the prior week. The central bank fully awarded both tenors.
Broken down, tenders for the 28-day securities reached P65.45 billion, higher than the P45 billion placed on the auction block and the P35.042 billion in bids seen for the P40-billion offer a week prior.
Banks asked for rates from 5.259% to 5.374%, narrower than the 5.25% to 5.4% band recorded previously. This caused the weighted average accepted rate of the one-month bills to go down by 2.18 basis points (bps) to 5.3337% from 5.3555%.
Meanwhile, the 56-day securities attracted bids amounting to P71.463 billion, above the P65 billion auctioned off and the P51.297 billion in demand for the P60-billion offer a week earlier.
Accepted yields were from 5.28% to 5.365%, a wider and higher range compared with the 5.265% to 5.34% margin previously. With this, the average rate of the two-month bills inched up by 0.69 bp to 5.3183% from the 5.3114% logged in the previous auction.
“BSP bills (BSPB) saw good demand,” the central bank said in a statement. “The BSP increased the total BSPB offer volume from P100 billion to P110 billion… Both tenors were oversubscribed, with bid-to-cover ratios of 1.45 times for the 28-day tenor, and 1.10 times for the 56-day tenor.”
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 short-term securities were calibrated to not overlap with the Treasury bill and term deposit tenors also being offered weekly.
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.
Data from the central bank showed that around 50% of its market operations are done through its short-term securities. — Katherine K. Chan
