Yields on central bank securities drop further
YIELDS on the central bank’s short-term securities declined further on Friday as both tenors were oversubscribed.
The Bangko Sentral ng Pilipinas (BSP) securities fetched bids amounting to P157.049 billion on Friday, higher than the P110-billion offer and the P152.319 billion in tenders for the P90 billion auctioned off in the previous week. The central bank fully awarded its offering.
Broken down, tenders for the 28-day BSP bills (BSPB) reached P70.992 billion, well above the P50-billion offering and the P59.611 billion in bids for the P40 billion placed on the auction block a week ago. The BSP made a full P50-billion award of the one-month securities.
Banks asked for yields ranging from 5.565% to 5.619%, lower than the 5.61% to 5.649% band seen a week earlier. This caused the average rate of the one-month securities to decline by 2.52 basis points (bps) to 5.607% from 5.6322% previously.
Meanwhile, bids for the 56-day bills amounted to P86.057 billion, higher than the P60-billion offering but lower than the P92.708 billion in tenders for the P50-billion offer the week prior. Still, the central bank made a full award of the two-month papers.
Accepted rates for the two-month tenor were from 5.55% to 5.613%, a wider and lower band compared to the 5.6% to 5.63% margin seen a week prior. With this, the average rate of the securities fell by 3.28 bps to 5.5878% from 5.6206% in the prior auction.
The central bank said in a statement that the BSP bills continued to see good demand even as it hiked the total volume it offered at Friday’s auction.
“Both tenors were oversubscribed, with bid-to-cover ratios of 1.42 times for the 28-day BSPB and 1.43 times for the 56-day BSPB,” it added.
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 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. — Luisa Maria Jacinta C. Jocson
