Rates of BSP securities inch up on weak demand
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities edged up on Friday as both tenors went undersubscribed after the offer volume was increased from the prior week.
The BSP bills fetched bids amounting to P163.236 billion on Friday, lower than the P200-billion offer as both tenors were undersubscribed. Still, this was higher than the P136.183 billion in demand for the P130 billion auctioned off a week prior.
The central bank accepted all the submitted bids for the one-month and two-month securities.
Broken down, tenders for the 28-day securities stood at just P78.41 billion, below the P100 billion placed on the auction block but above the P64.217 billion in bids seen last week for a P60-billion offer volume.
Accepted yields were from 5.325% to 5.43%, narrower than the 5.3% to 5.432% from a week prior. This caused the weighted average accepted rate for the 28-day securities to rise by 0.1 basis point (bp) to 5.3852% from 5.3842% previously.
Meanwhile, bids for the two-month bills amounted to P84.826 billion, lower than the P100-billion offer but higher than the P71.966 billion in tenders for the P70 billion auctioned off the week prior.
Banks asked for yields ranging from 5.368% to 5.42%, wider and higher than the 5.365% to 5.41% band seen in the previous auction. With this, the average rate of the 56-day securities inched up by 0.61 bp to 5.3971% from the 5.391% recorded previously.
“BSP bill (BSPB) rates were broadly stable,” the central bank said in a statement.
The BSP said yields on the short-term securities were “marginally higher” as its offer went undersubscribed after it increased the amount it auctioned off versus the previous week.
“The BSP raised the total offer volume from P130 billion to P200 billion, increasing the 28-day offering from P60 billion to P100 billion and the 56-day offering from P70 billion to P100 billion. Total tenders rose from P136.183 billion to P163.236 billion. The resulting bid-to-cover ratios were 0.78x for the 28-day tenor and 0.85x 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. — Katherine K. Chan
