BSP securities fetch higher yields

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term bills rose on Friday as demand fell, with both tenors undersubscribed.

The central bank securities fetched bids amounting to P133.598 billion on Friday, lower than the P160-billion offer and the P151.057 billion in tenders for the P190 billion auctioned off in the prior week. The BSP awarded P129.588-billion worth of bills.

Broken down, tenders for the 28-day BSP bills reached P48.253 billion, below the P70-billion offer and the P60.185 billion in bids for the P90 billion placed on the auction block a week ago. The central bank accepted just P44.243 billion in bids on Friday.

Accepted yields ranged from 5.774% to 5.894%, higher than the 5.75% to 5.84% band seen a week earlier. This caused the average rate of the one-month securities to increase by 1.62 basis points (bps) to 5.8119% from 5.7957% previously.

Meanwhile, bids for the 56-day bills amounted to P85.345 billion, also lower than the P90-billion offering and the P90.872 billion in tenders for a P100-billion offer the week prior. The central bank accepted all tenders for the tenor.

Accepted rates for the two-month tenor were from 5.8% to 5.988%, above the 5.785% to 5.929% margin seen a week ago. With this, the average rate of the 56-day securities rose by 3.97 bps to 5.8769% from 5.8372% logged in the prior auction.

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

BSP securities fetch higher yields
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