THE CENTRAL BANK fully awarded the short-term debt papers it offered on Friday as demand remained strong on ample liquidity in the financial system.

The Bangko Sentral ng Pilipinas (BSP) awarded P80 billion as planned in 28-day securities on Friday as the offer was almost twice oversubscribed, with bids hitting P141 billion.

This marked the sixth straight week that the central bank fully awarded its offer of securities.

Yields on the 28-day papers ranged from 1.9% to 2.125%, a slimmer band compared with the 1.85% to 2.25% margin the prior auction. With this, the average rate for the securities stood at 2.0273%, climbing 13.17 basis points from the 1.8956% seen a week ago.

The auction results continued to reflect the ample liquidity in the financial market, BSP Deputy Governor Francisco G. Dakila, Jr. said on Friday.

“Players are jostling for gains. The BSP can dictate clearly because of its current loaded position,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text message.

BSP Governor Benjamin E. Diokno earlier said the liquidity boost from the central bank’s policy measures reached P1.9 trillion, which is about 9.6% of the country’s gross domestic product.

The higher yields on the one-month paper came after the release of the September budget deficit data, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“BSP securities auction yield went up after the release of the latest budget deficit data that still signal the need for more local borrowings by the government to finance the budget deficit amid the continued year-on-year decline in tax revenues due to COVID-19,” Mr. Ricafort said in a text message.

The government’s budget deficit stood at P178.6 billion in September, narrower by 22.42% from the P178.6 billion a year ago, data from the Bureau of the Treasury showed. Year-to-date, the gap widened 194.06% to P879.2 billion from the P299 billion logged in the same period of 2019.

Revenues shored up in the month dropped 10.19% to P212.4 billion as tax collections fell by 8.51% to P193 billion.
In the nine months to September, government revenues dropped 7.92% to P2.143 trillion as tax collections slumped 11.28% to P1.854 trillion. — L.W.T. Noble