Yields on BSP’s short-term debt dip; 28-day bills undersubscribed
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) 28- and 56-day securities fell on Friday, even as the one-month debt was undersubscribed.
Total bids hit P156.054 billion against a P150-billion offer but below the P157.049 billion in tenders for the P110-billion offer a week earlier.
Tenders for the 28-day debt reached P66.877 billion, below the P70 billion placed on the auction block. The central bank partially awarded P64.877-billion in one-month securities.
Accepted rates ranged from 5.535% to 5.637%, wider than 5.565% to 5.619% a week earlier. This caused the average rate of the one-month securities to drop 2.69 basis points (bps) to 5.5801%.
Meanwhile, bids for the 56-day bills hit P89.177 billion, above the P80-billion offer and P86.057 billion in tenders for the P60-billion offer a week earlier. The BSP fully awarded the two-month debt.
The BSP accepted bids with yields of 5.535% to 5.62%, also wider than 5.55% to 5.613% a week earlier. The average rate of the 56-day securities fell 0.32 bp to 5.5846% from the previous auction.
“The resulting bid-to-cover ratios stood at 0.96 times for the 28-day tenor and 1.11 times for the 56-day tenor,” the central bank said in a statement on Friday.
The BSP uses the short-term debt and its term deposit facility to mop up excess liquidity from the financial system and to better guide market rates.
The BSP securities were calibrated so they don’t overlap with tenors of the Treasury bills and term deposits also being sold weekly.
Data from the central bank showed that about 50% of its market operations are done through short-term bills.
Short-term instruments offer more stability and predictability and are considered high-quality liquid assets, giving banks more flexibility, according to the BSP.
BSP securities can also be traded in the secondary market. — Luisa Maria Jacinta C. Jocson
