YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday with the two-month tenor going undersubscribed for a second straight week.
The BSP bills fetched bids amounting to P205.117 billion on Friday, above the P170-billion offer and the P185.96 billion in tenders for the same volume auctioned off in the previous week.
Broken down, tenders for the 28-day BSP bills reached P110.309 billion, higher than the P70-billion offer and the P88.323 billion in bids for same volume auctioned off the week prior.
Banks asked for yields ranging from 5.725% to 5.799%, narrower than the 5.7% to 5.839% band seen a week earlier. This caused the average rate of the one-month securities to decline by 5.48 basis points (bps) to 5.7571% from 5.8119% previously.
Meanwhile, bids for the 56-day bills amounted to P94.808 billion, below the P100-billion offering and the P97.637 billion in tenders for the same volume offered by the central bank in the previous week. The BSP accepted all the submitted bids.
Accepted rates for the two-month tenor were from 5.763% to 5.9%, narrower than the 5.73% to 5.9% margin seen a week prior. With this, the average rate of the securities inched up by 0.93 bp to 5.8141% from 5.8048% logged in the previous auction.
The central bank made a partial award of its offering of short-term securities as the two-month BSP bills (BSPB) went undersubscribed, BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
“Total tenders received increased to P205.117 billion from P185.96 billion, with the 28-day BSPB 1.58 times oversubscribed while the 56-day BSPB was undersubscribed with a bid-to-cover ratio of 0.95 times.”
“The BSP fully awarded its offering for the 28-day BSPB and accepted the P94.808-billion worth of total tenders for the 56-day BSPB.”
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 the Treasury bill and term deposit tenors 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” and grants more flexibility for banks versus term deposits, which are not tradable. — Luisa Maria Jacinta C. Jocson
