Yields on BSP’s short-term securities end mixed

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday even with both tenors going oversubscribed.

The BSP bills fetched bids amounting to P172.312 billion on Friday, above the P130-billion offer and the P141.859 billion in tenders for the same volume auctioned off in the previous week. However, the central bank only awarded P129.228 billion in securities as it capped its acceptance for the one-month papers.

Broken down, tenders for the 28-day BSP bills reached P52.228 billion, higher than the P50-billion offer and the P42.659 billion in bids for the same volume auctioned off the week prior. The BSP made a partial P49.228-billion award of the offer to cap the increase in rates.

Accepted yields ranged from 5.809% to 5.9%, higher than the 5.789% to 5.89% band seen a week earlier. This caused the average rate of the one-month securities to increase by 2.22 basis points (bps) to 5.8474% from 5.8252% previously.

Meanwhile, bids for the 56-day bills amounted to P120.084 billion, above the P80-billion offering and the P99.2 billion in tenders for the same volume offered by the central bank in the previous week. The BSP made a full award of the offer.

Banks asked for yields ranging from 5.85% to 5.9%, narrower than the 5.846% to 5.94% margin seen a week prior. With this, the average rate of the securities declined by 1.03 bps to 5.8763% from 5.8866% logged in the previous auction.

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 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. — Luisa Maria Jacinta C. Jocson