BSP securities fetch higher rate

THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities fetched a higher average yield on Friday, with the regulator capping its award even as the offer fetched ample demand.

The 28-day BSP bills drew P50.676 billion in bids, just above the P50-billion offering. This was also higher than the P42.501 billion in tenders for the P60 billion placed on the auction block on March 23.

This translated to a higher bid-to-cover ratio of 1.0135 times from 0.7084 previously.

However, the BSP accepted just P49.676 billion in tenders.

Accepted yields widened to the 4.3% to 4.6125% range from 4.4% to 4.6% in the previous auction. With this, the weighted average accepted rate of the 28-day bills increased by 3.35 basis points to 4.5191% from 4.4856%.

The BSP has not auctioned off the 56-day bills since Nov. 3.

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to help guide short-term market yields towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.

The central bank began auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.

BSP Deputy Governor Zeno Ronald R. Abenoja earlier said the central bank has reduced its issuance of short-term papers to enhance monetary policy transmission and encourage banks to better manage their liquidity.

As of mid-February, the central bank’s monetary operations have siphoned off P1.2 trillion in liquidity from the market. Of this, 28.5% was absorbed through BSP securities, while 44.4% were done through overnight reverse repurchase facility, and 9% from the term deposit facility. — Aaron Michael C. Sy