BSP bills fetch mixed rates on lower demand for both tenors

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday as lower demand led to both tenors going undersubscribed.

The BSP bills fetched bids amounting to P155.76 billion on Friday, lower than the P190-billion offer and the P195.495 billion in tenders for the same volume auctioned off the week prior. The central bank awarded only P153.76 billion in securities.

Broken down, tenders for the 28-day BSP bills reached P59.534 billion, below the P70 billion placed on the auction block and the P81.659 billion in bids for the same volume offered in the previous week. The central bank awarded just P58.534 billion in one-month bills.

Accepted rates ranged from 5.78% to 5.86%, a tad wider than the 5.79% to 5.8575% band seen a week earlier. This caused the average rate of the one-month securities to inch down to 5.8221% from 5.8222% previously.

Meanwhile, bids for the 56-day bills amounted to P96.226 billion, also below the P120-billion offering and the P113.836 billion in tenders for the same volume offered by the central bank a week ago. The BSP made a partial P95.226-billion award of the two-month papers.

The BSP accepted bids with yields ranging from 5.773% to 5.86%, narrower than the 5.74% to 5.85% margin seen a week prior. With this, the average rate of the 56-day securities rose by 1.55 basis points to 5.8289% from 5.8134% logged in the previous auction.

The central bank’s total award of BSP bills (BSPB) on Friday dropped from the prior week as demand declined even as it maintained its offer volume, BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

“Total tenders decreased to P155.76 billion from P195.495 billion in the previous week. The resulting bid-to-cover ratios were at 0.85 times for the 28-day BSPB and at 0.80 times for the 56-day BSPB.”

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity from the financial system and to better guide market rates.

The BSP bills were calibrated to not overlap with tenors of the Treasury bills and term deposits 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.

Short-term instruments offer more stability and predictability, the BSP has said. These are also considered high-quality liquid assets, giving banks more flexibility.

BSP securities can also be traded in the secondary market. — Luisa Maria Jacinta C. Jocson