Yields on BSP bills move sideways
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday, even with both tenors oversubscribed despite fetching lower tenders.
The BSP bills fetched bids amounting to P144.219 billion on Friday, higher than the P130-billion offer but lower than the P160.207 billion in tenders for the P140-billion auctioned off on June 9. The central bank fully awarded its offering of securities.
Broken down, tenders for the 28-day BSP bills reached P60.602 billion, above the P50-billion placed on the auction block but lower than the P63.802 billion in bids seen for the P60-billion offer in the previous auction. The BSP made a full P50-billion award of the one-month papers.
Accepted rates ranged from 5.53% to 5.6%, a tad narrower than the 5.52% to 5.62% band seen a week earlier. This caused the average rate of the one-month securities to inch down by 0.53 basis point (bp) to 5.5799% from 5.5852% previously.
Meanwhile, bids for the 56-day bills amounted to P83.617 billion on Friday, slightly higher than the P80-billion offering but below the P96.405 billion in tenders for the same volume offered by the BSP on June 9. The central bank fully awarded P80 billion in two-month securities.
Banks asked for yields ranging from 5.545% to 5.597%, slimmer than the 5.5375% to 5.61% margin seen a week prior. With this, the average rate of the 56-day securities edged up by 0.12 bp to 5.5835% from 5.5823% logged in the previous auction.
The central bank fully awarded its offer of short-term BSP bills (BSPB) as rates were “broadly stable,” it said in a statement.
“Weighted average interest rates were largely unchanged,” it said.
“The BSP reduced the total offer volume to P130 billion from P140 billion previously, lowering the 28-day offering to P50 billion from P60 billion and maintaining the 56-day offering at P80 billion. Total tenders declined to P144.219 billion from P160.207 billion in the week prior. Nonetheless, both tenors were oversubscribed, with bid-to-cover ratios of 1.21 times for the 28-day tenor and 1.05 times for the 56-day tenor,” the central bank 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 short-term market rates towards its policy rate.
The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission, the central bank said.
The central bank securities 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 its short-term securities.
The BSP bills are considered high-quality liquid assets for the computation of banks’ liquidity coverage ratio, net stable funding ratio, and minimum liquidity ratio.
They can also be traded on the secondary market. — A.M.C. Sy
