YIELDS on the central bank’s short-term securities ended lower on Friday, with strong demand seen for the two-month tenors.
The Bangko Sentral ng Pilipinas’ (BSP) bills fetched bids amounting to P153.009 billion on Friday, higher than the P130-billion offer but slightly below the P155.76 billion in tenders for the P190-billion volume auctioned off the week prior.
Still, the central bank awarded just P121.684 billion in securities as the one-month tenor was undersubscribed.
Broken down, tenders for the 28-day BSP bills reached P41.684 billion, lower than the P50 billion placed on the auction block and the P59.534 billion in bids for the P70-billion volume offered in the previous week. The central bank accepted all the submitted bids.
Banks asked for rates ranging from 5.645% to 5.85%, lower than the 5.78% to 5.86% margin seen a week earlier. This caused the average rate of the one-month securities to fall by 4.39 basis points (bps) to 5.7782% from 5.8221% previously.
Meanwhile, bids for the 56-day bills amounted to P111.325 billion, well above the P80-billion offering and the P96.226 billion in tenders for the P120-billion offer by the central bank a week ago. The BSP made a full P80-billion award of the two-month papers.
Accepted yields were from 5.6125% to 5.816%, lower than the 5.773% to 5.86% band seen a week prior. With this, the average rate of the 56-day securities declined by 8.59 basis points to 5.743% from 5.8289% logged in the previous auction.
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.
Earlier 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.
Central bank securities can also be traded in the secondary market. — Luisa Maria Jacinta C. Jocson
