BSP bills’ rates drop as demand soars

THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities fetched a lower average rate on Friday as demand for the offering remained strong.

The 28-day BSP bills attracted bids amounting to P164.166 billion, exceeding the P90 billion auctioned off and the P129.759 billion in tenders for the same offer volume a week earlier. This translated to a bid-to-cover ratio of 1.8241 times, higher than the 1.4418 ratio seen the previous week.

The central bank made a full P90-billion award of its offer.

Accepted rates were from 4.724% to 4.78%, narrowing from the 4.65% to 4.85% band logged in the previous week. With this, the average accepted rate of the one-month papers dropped by 6.03 basis points to 4.7496% from 4.8099%.

The BSP has not auctioned off the 56-day bills for nearly three months or 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 BSP showed that around 50% of its market operations are done through the short-term bills.

As of mid-November 2025, the BSP’s monetary operations have siphoned off P1.5 trillion in liquidity, based on central bank data.

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

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

In August 2025, 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. — Katherine K. Chan