YIELDS on the central bank’s short-term securities rose on Friday as both tenors went undersubscribed.
The Bangko Sentral ng Pilipinas (BSP) securities fetched bids amounting to P151.057 billion on Friday, below the P190-billion offer and the P205.117 billion in tenders for the P170 billion auctioned off in the previous week. The central bank awarded P150.057 billion worth of bills.
Broken down, tenders for the 28-day BSP bills reached P60.185 billion, lower than the P90-billion offer and the P110.309 billion in bids for the P70 billion placed on the auction block a week ago. The central bank accepted P59.185 billion in bids.
Accepted yields ranged from 5.75% to 5.84%, higher than the 5.725% to 5.799% band seen a week earlier. This caused the average rate of the one-month securities to increase by 3.86 basis points (bps) to 5.7957%% from 5.7571% previously.
Meanwhile, bids for the 56-day bills amounted to P90.872 billion, also below the P100-billion offering and the P94.808 billion in tenders for the same volume offer the week prior. The BSP accepted all tenders submitted for the tenor.
Tenders accepted by the central bank carried yields ranging from 5.785% to 5.929%, likewise higher than the 5.763% to 5.9% margin seen a week ago. With this, the average rate of the securities went up by 2.31 bps to 5.8372% from 5.8141% 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