BSP bills fetch higher average rate on weak demand

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities climbed on Monday as the offer was met with weak demand.

The 28-day BSP bills drew only P42.501 billion in bids on Monday, lower than the P60-billion offer and the P70.788 billion in tenders for the same volume auctioned off on March 13. The central bank did not hold the auction on Friday due to the Eid’l Fitr holiday.

This translated to a lower bid-to-cover ratio of 0.7084 times from 1.1798 previously.

As a result, the BSP accepted all P42.501 billion in tenders for a partial award of its offering.

Accepted yields widened to the 4.4% to 4.6% range from 4.3875% to 4.545% in the previous auction. With this, the average accepted rate of the 28-day bills rose by 3.92 basis points to 4.4856% from 4.4464%.

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.

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.

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

As of mid-November 2025, the central bank’s monetary operations have siphoned off P1.5 trillion in liquidity from the market. Of this, 42.4% was absorbed through BSP securities, 34.6% from overnight reverse repurchase agreements, 17.6% via the overnight deposit facility, and 5.4% through the term deposit facility.

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. — Katherine K. Chan