THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities attracted a much higher rate on Friday even as market demand for the papers held strong week on week.
Bids for the 28-day BSP bills stood at P22.635 billion, above the P20 billion placed on the auction block but below the P29.265 billion in tenders for the same volume auctioned off in the prior week.
This was equivalent to a bid-to-cover ratio of 1.1318 times, lower than the previous auction’s 1.4633 ratio.
Still, the BSP awarded its entire offering following the oversubscription.
Accepted rates for the one-month securities ranged from 5.125% to 5.7%, wider and higher than the 5.05% to 5.548% logged a week earlier. With this, its weighted average accepted rate jumped by 19.27 basis points week on week to 5.5665% from 5.3738%.
This marked the fourth straight week that the BSP bills’ average yield moved higher.
The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to help guide short-term market yields towards its policy rate.
The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.
The central bank began auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.
It has now limited its BSP securities offerings to a single tenor to rationalize its liquidity operations and focus on tenors that would boost monetary policy pass-through.
Based on its August 2026 Monetary Policy Report, the central bank’s open market operations have siphoned off P975.4 billion in liquidity from the financial system.
Of this, 14.8% was absorbed through BSP securities, while 45.6% was mopped up through the overnight reverse repurchase facility, 27.3% via the overnight deposit facility, and 12.3% from the term deposit facility.
The BSP said interest rates on its 28-day bills fully reflected the two 25-bp policy rate hikes it delivered in April and June. — Katherine K. Chan