THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded P100 billion in short-term securities on Friday as the financial system remains flush with liquidity.

The BSP’s offer of 28-day bills was oversubscribed as tenders reached P150.9 billion. However, Friday’s bids were lower than the P162.8 billion in demand seen last week.

“The sustained robust demand for the BSP bills shows that financial system liquidity remains ample as cash demand continues to normalize,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The BSP has made full awards of its offer of 28-day bills for 18 consecutive auctions since it launched its weekly securities auctions in September.

Rates for the bills ranged from 1.6% to 1.63%, a slightly wider band than the 1.6285% to 1.645% logged a week earlier. This caused the average rate for the papers to settle at 1.6251%, slipping by 1.11 basis points (bps) from the 1.6362% logged on Jan. 22.

The 28-day securities and term deposits are among tools used by the central bank to gather excess liquidity in the financial system and to better guide short-term market interest rates.

“The 28-day BSP securities auction yield continued to ease after the latest contraction in GDP (gross domestic product) data, though with smaller contraction versus the previous quarter,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The economy shrank by 8.3% in the fourth quarter of 2020, bringing the full-year decline to 9.5%, data from the Philippine Statistics Authority showed.

The central bank’s easing measures amid the crisis infused about P2 trillion in liquidity into the financial system last year, which is equivalent to about 10% of the GDP. — LWTN

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