BSP securities fetch higher average rate

THE CENTRAL BANK’S one-month securities saw its average rate go up on Friday, even as the offering was oversubscribed.

Total bids for the Bangko Sentral ng Pilipinas’ (BSP) 29-day bills reached P86.74 billion, exceeding the P80 billion auctioned off and the P80.828 billion in tenders for the P90 billion in 28-day securities offered the previous week.

This was equivalent to a bid-to-cover ratio of 1.0843 times, higher than the 0.8981 ratio seen the prior week.

As a result, the central bank made a full award of its offering.

Accepted yields were from 4.65% to 5%, narrower than the 4.5% to 5% seen in the previous auction. This caused the weighted average accepted rate of the one-month securities to go up by 3.41 basis points to 4.7842% from 4.7501%.

The BSP has not auctioned off the 56-day bills for nearly two months or since Nov. 3. Meanwhile, the tenor offered on Friday was adjusted from the usual 28-day maturity due to a holiday.

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 yields towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.

In August, BSP Governor Eli M. Remolona, Jr. said they are gradually shifting away from the issuance of short-term papers to manage liquidity as they want to boost activity in the money market.

The central bank started auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.

Data from the central bank showed that around 50% of its market operations are done through its short-term securities. — Katherine K. Chan