YIELDS on the central bank’s short-term securities declined on Friday even as both tenors were oversubscribed.
The Bangko Sentral ng Pilipinas (BSP) securities fetched bids amounting to P105.539 billion on Friday, higher than the P80-billion offer and the P81.918 billion in tenders for the P140 billion auctioned off in the previous week.
Broken down, tenders for the 26-day BSP bills reached P53.214 billion, above the P40-billion offer and the P32.891 billion in bids for the P70 billion placed on the auction block a week ago.
Banks asked for yields ranging from 5.8125% to 6.011%, lower than the 5.875% to 6.288% band seen a week earlier. This caused the average rate of the one-month securities to decline by 10.62 basis points (bps) to 5.8707% from 5.9769% previously.
Meanwhile, bids for the 54-day bills amounted to P52.325 billion, also higher than the P40-billion offering and the P49.027 billion in tenders for a P70-billion offer the week prior.
Accepted rates for the two-month tenor were from 5.975% to 6.15%, narrower than the 5.975% to 6.288% margin seen a week ago. With this, the average rate of the securities dropped by 2.12 bps to 6.0614% from 6.0826% logged in the prior auction.
The tenors of the BSP bills (BSPB) were adjusted from the usual 28-day and 56-day maturities due to holidays.
The central bank made a full award of the BSP bills as demand rose, BSP Deputy Governor Francisco Dakila, Jr. said in a statement. “Total tenders received increased to P105.539 billion (from P81.918 billion) and resulted in a bid-to-cover ratio of 1.3 times for both the 26-day and 54-day tenors.”
“The weighted average interest rates fell, with the 26-day BSPB lower by 10.6 bps at 5.8707%, while the 54-day BSPB was 2.1 bps lower at 6.0614%,” he added. “The range of accepted yields narrowed to 5.8125-6.0110% for the 26-day BSPB and to 5.9750-6.1500% for the 54-day BSPB.”
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 market rates.
The BSP bills 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 the short-term BSP bills.
Short-term instruments offer more stability and predictability, the BSP earlier said. These are also considered “high-quality liquid assets” and grants more flexibility for banks versus term deposits, which are not tradable. — Luisa Maria Jacinta C. Jocson
