Yields on BSP securities inch up as demand climbs
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities edged up on Friday, with both tenors attracting higher demand.
The BSP bills fetched total bids amounting to P126.497 billion on Friday, above the P120 billion placed on the auction block and the P83.946 billion in demand recorded for the same volume offered a week prior.
However, the central bank awarded only P107.96 billion in securities as the one-month tenor was undersubscribed for the fifth straight auction.
Broken down, tenders for the 28-day bills amounted to P47.96 billion, below the P60 billion placed on the auction block but higher than the P39.812 billion in bids seen last week for a P50-billion offer volume. The BSP accepted all the submitted bids.
Banks asked for yields ranging from 5.175% to 5.42%, higher than the 5.16% to 5.41% spread seen the week prior. This caused the weighted average accepted rate for the one-month securities to rise by 0.42 basis point (bp) to 5.337% from 5.3328% previously.
Meanwhile, bids for the 56-day BSP bills reached P78.537 billion, higher than the P60-billion offer and the P44.134 billion in tenders for the P70 billion auctioned off the previous week. The central bank made a full award of the two-month papers.
Accepted yields ranged from 5.195% to 5.38%, narrower than the 5.19% to 5.42% band seen in the previous auction. With this, the average rate of the two-month securities inched up by 0.24 bp to 5.3406% from 5.3382% the week prior.
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. — K.K. Chan
