Rates of short-term BSP bills end mixed

RATES of the Bangko Sentral ng Pilipinas’ (BSP) short-term bills ended mixed on Friday, with both tenors oversubscribed as the offer volume was lowered.

The BSP bills fetched bids amounting to P112.781 billion, above the P100 billion placed on the auction block but lower than the P126.497 billion in demand for the P120-billion offer a week prior. The central bank made a full P100-billion award of the securities.

Broken down, bids for the 28-day papers amounted to P46.395 billion, more than the P40 billion auctioned off but below the P47.96 billion in bids seen in the prior week for a P60-billion offer.

This marked the first time after five weeks that the one-month bills were oversubscribed.

Banks asked for rates from 5.198% to 5.395%, narrower than the 5.175% to 5.42% margin seen in the previous auction. With this, the average rate of the one-month securities inched up by 0.61 basis point (bp) to 5.3431% from 5.337% previously.

Meanwhile, the 56-day bills attracted P66.386 billion in tenders, higher than the P60-billion offer but below the P78.537 billion in demand for the same volume offered a week prior.

Accepted yields were from 5.25% to 5.359%, narrower than the 5.195% to 5.38% spread a week prior. This caused the weighted average accepted rate for the two-month securities to decline by 1.48 bp to 5.3258% from 5.3406% previously.

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 short-term market rates towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission, the central bank said.

The short-term securities 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 its short-term securities.

The BSP bills are considered high-quality liquid assets for the computation of banks’ liquidity coverage ratio, net stable funding ratio, and minimum liquidity ratio. They can also be traded on the secondary market. — Katherine K. Chan