BSP short-term debt rates fall

RATES of the Philippine central bank’s short-term securities fell on Friday amid higher demand.

The Bangko Sentral ng Pilipinas (BSP) bills fetched bids worth P137.87 billion, higher than the P90-billion offer and P119.459 billion in tenders for the P80 billion auctioned off a week earlier. The central bank awarded P90 billion in securities as planned.

The tenders for the 28-day BSP bills reached P52.165 billion, more than the P40 billion placed on the auction block and higher than the P48.109 billion in bids for a P30-billion offer in the previous week. The central bank fully awarded the one-month debt.

Banks asked for rates ranging from 5.63% to 5.692%, lower than the 5.64% to 5.7135% margin a week earlier. This caused the average rate of the one-month securities to decline by 1.84 basis points (bps) to 5.6628%.

Meanwhile, bids for the 56-day bills hit P85.705 billion, more than the P50-billion offer and P85.705 billion in tenders for the same volume offered by the central bank a week earlier. The BSP fully awarded P50 billion in two-month bills.

Accepted yields were 5.625% to 5.675%, lower than 5.64% to 5.718% a week ago. The average rate of the 56-day securities went down by 4.86 bps to 5.6555%.

“The resulting bid-to-cover ratios stood at 1.30x for the 28-day tenor and 1.71x for the 56-day tenor,” the BSP said in a statement.

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and 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 about 50% of its market operations are done through short-term BSP bills.

The 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. — Aaron Michael C. Sy