By Beatrice M. Laforga, Reporter

The Philippine central bank raised P70 billion in short-term securities on Friday due to strong liquidity.

The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day bills it had auctioned off out of P120.55 billion worth of total bids, making the offer nearly twice oversubscribed.

This was the seventh straight week the central bank had fully awarded the bills since it started selling its own securities on Sept. 18.

Yields sought ranged from 1.99% to 2.075%, narrower than 1.9-2.125% in the previous auction. The debt paper fetched an average rate of 2.0367%, up by 0.94 basis point from a week earlier.

“The auction results for the 28-day bill show that liquidity in the financial system remains ample,” BSP Deputy Governor Francisco Dakila, Jr. said in a statement. “The BSP monetary operations will remain guided by its assessment of market developments and liquidity conditions.”

The recent uptick in US bond yields might have pushed up local rates, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a mobile phone message.

The benchmark rate of 10-year US Treasury bonds inched up to 0.82% on Friday, according to Bloomberg data.

Mr. Ricafort said the increase was driven by market expectations ahead of the US presidential election on Nov. 3.
He said rates of BSP’s securities have been rising in the past few weeks after its lending cap to the National Government was raised to P850 billion.

This increased the central bank’s lending to the National Government and increased the weekly mopping up operations of excess liquidity from the financial system, he added.

The Monetary Board approved earlier this month a new tranche of provisional advance to the government worth P540 billion, after the latter repaid P300 billion in maturing debt.

Yields on the central bank’s term deposit facility offered this week also increased before US elections.