BSP securities fetch lower rates
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities dropped on Friday as both tenors attracted strong demand.
The central bank securities fetched bids amounting to P152.319 billion on Friday, higher than the P90-billion offer and the P137.87 billion in tenders for the same volume auctioned off in the previous week. This allowed the BSP to make a full award of both tenors.
Broken down, tenders for the 28-day BSP bills reached P59.611 billion, above the P40-billion offering and the P52.165 billion in bids for the same volume placed on the auction block a week prior. The BSP awarded P40 billion in one-month papers as planned.
Banks asked for yields ranging from 5.61% to 5.649%, narrower and lower than the 5.63% to 5.692% band seen a week earlier. This caused the average rate of the one-month securities to decline by 3.06 basis points (bps) to 5.6322% from 5.6628% previously.
Meanwhile, bids for the 56-day bills amounted to P92.708 billion, much higher than the P50-billion offering as well as the P85.705 billion in tenders for the same offer the week prior. The central bank made a full P50-billion award of the two-month securities.
Accepted rates for the two-month tenor were from 5.6% to 5.63%, down from the 5.625% to 5.675% margin seen a week ago. With this, the average rate of the securities fell by 3.49 bps to 5.6206% from 5.6555% logged in the prior auction.
The BSP said it fully awarded the short-term securities as it saw higher demand even as it kept its offer volume steady from the week prior.
“Total tenders rose to P152.319 billion from P137.87 billion in the previous week. The resulting bid-to-cover ratios were at 1.49 times for the 28-day tenor and 1.85 times for the 56-day tenor,” it 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 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 its short-term securities.
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
