BSP securities fetch lower rates on good demand

YIELDS on the central bank’s one-month securities dropped on Friday as the offer was met with strong demand despite the higher auction volume.

The 28-day Bangko Sentral ng Pilipinas (BSP) bills fetched P138.162 billion in bids on Friday, above the P90 billion placed on the auction block and P123.48 billion in tenders for an P80-billion offer the prior week.

The bid-to-cover ratio edged down to 1.5351 times from the 1.5435 ratio logged a week prior amid the higher offer volume.

The BSP made a full award of its offer.

“The 28‑day BSP bill auction saw good demand,” the central bank said in a statement on Friday.

Accepted rates ranged from 4.58% to 4.67%, lower and wider than the 4.65% to 4.714% band seen in the previous auction. This brought the weighted average interest rate of the one-month papers down by 5.99 basis points week on week to 4.6382% from 4.6981%.

The BSP has not auctioned off the 56-day bills since Nov. 3.

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.

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

As of mid-November 2025, the BSP’s monetary operations have siphoned off P1.5 trillion in liquidity from the market.

Of the total, 42.4% were absorbed through BSP securities, 34.6% via overnight reverse repurchase agreements, 17.6% through the overnight deposit facility, and 5.4% via the term deposit facility.

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

In August last year, 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 BSP chief said last week that they have seen increased trading volumes.

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. — K.K. Chan