YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities inched higher on Friday even as total demand picked up, with the one-month bill still undersubscribed.
The central bank’s securities fetched bids amounting to P141.859 billion on Friday, higher than the P130-billion offer and the P133.598 billion in tenders for the P160 billion auctioned off the prior week.
Still, the BSP awarded just P122.659 billion in bills last week, below the amount on the auction block, as the one-month tenor was undersubscribed.
Tenders for the 28-day BSP bills reached just P42.659 billion, below the P50-billion offer and the P48.253 billion in bids for the P70 billion placed on the auction block a week earlier. The central bank accepted all tenors submitted.
Banks asked for yields ranging from 5.789% to 5.89%, narrowing from the 5.774% to 5.894% band previously. This caused the average rate of the one-month securities to increase by 1.33 basis points (bps) to 5.8252% from 5.8119%.
Meanwhile, bids for the 56-day bills amounted to P99.2 billion, higher than the P80-billion offering and the P85.345 billion in tenders for a P90-billion offer the previous week. The BSP made a full P80-billion award of the two-month bills.
Accepted rates for the two-month tenor were from 5.846% to 5.94%, also narrower than the 5.8% to 5.988% margin seen in the prior auction. With this, the average rate of the securities rose by 0.97 bp to 5.8866% from 5.8769%.
The central bank reduced last week’s total offering of BSP bills (BSPB) compared to the previous auction volume, BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
“Total tenders for the Feb. 28 BSPB auction increased to P141.859 billion from P133.598 billion in the previous week. The 28-day BSPB auction had a bid-to-cover ratio of 0.85 times, while the 56-day BSPB was 1.24 times oversubscribed.”
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 earlier said. These are also considered “high-quality liquid assets” and grant more flexibility for banks versus the term deposits, which are not tradable. — Luisa Maria Jacinta C. Jocson
