Yields on BSP bills end mixed
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday as the one-month tenor went undersubscribed for a third straight week despite the lower volume offered.
The BSP bills fetched bids amounting to P115.207 billion on Friday, below the P120-billion placed on the auction block and the P163.236 billion in demand for the P200-billion offer a week prior. However, the central bank awarded only P103.231 billion in securities.
Broken down, bids for the 28-day papers amounted to only P44.231 billion, lower than the P60 billion auctioned off by the BSP and the P78.41 billion in bids seen last week for the P100 billion on offer. The central bank only accepted P43.231 billion in tenders.
Accepted yields were from 5.295% to 5.43%, wider than the 5.325% to 5.43% from a week prior. This caused the weighted average accepted rate for the 28-day securities to inch up by 0.76 basis point (bp) to 5.3928% from 5.3852% previously.
Meanwhile, tenders for the 56-day bills reached P70.976 billion, higher than the P60-billion offer but below the P84.826 billion in tenders for the P100 billion auctioned off a week prior. The BSP fully awarded the two-month securities.
Banks asked for rates ranging from 5.35% to 5.4%, narrower and lower than the 5.368% to 5.42% band seen in the previous auction. With this, the average rate of the 56-day securities slipped by 0.69 bp to 5.3902% on Friday from the 5.3971% recorded a week prior.
Rates for the BSP bills (BSPB) were mostly steady even as the central bank lowered the offer volume, it said in a statement.
“The BSP reduced the total BSPB volume offering from P200 billion to P120 billion, with an equal mix of P60 billion from P100 billion for each tenor. Total tenders received amounted to P115.207 billion, lower than P163.236 billion in the previous week,” the BSP said. “The 28-day tenor had a bid-to-cover ratio of 0.74x, while the 56-day tenor was 1.18x oversubscribed.”
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
