Bangko Sentral ng Pilipinas main office in Manila. — BW FILE PHOTO

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities inched higher on Friday as both tenors went undersubscribed after the offer volume was increased.

The BSP bills attracted only P86.339 billion in total bids, below the P100 billion auctioned off but slightly above the P86.003 billion in tenders for the P80-billion offer a week prior. The central bank accepted all the submitted bids for a partial award.

Broken down, tenders for the 28-day BSP bills reached P35.042 billion, lower than the P40 billion placed on the auction block but higher than the P30.119 billion in demand for the P30-billion offer the prior week.

Accepted yields were from 5.25% to 5.4%, a tad wider than the 5.255% to 5.4% margin seen a week prior. This caused the average rate of the one-month securities to go up by 1.01 basis points (bps) to 5.3555% from 5.3454% previously.

Meanwhile, bids for the 56-day bills totaled P51.297 billion, below the P60-billion offer and the P55.884 billion in tenders for the P50 billion auctioned the previous week.

Banks asked for rates from 5.265% to 5.34%, wider than the 5.29% to 5.34% band last week. With this, the weighted average accepted yield of the two-month papers edged up by 0.08 bp to 5.3114% from 5.3106%.

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 short-term securities were calibrated to not overlap with the Treasury bill and term deposit tenors also being offered weekly.

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.

Data from the central bank showed that around 50% of its market operations are done through its short-term securities.

BSP Governor Eli M. Remolona, Jr. earlier said that they are gradually shifting away from the issuance of short-term papers in their liquidity management operations as they want to boost activity in the money market. — Katherine K. Chan

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