BSP bills’ rates rise on weak demand

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities inched higher on Friday as both tenors went undersubscribed after the offer volume was increased.

- Katherine K. Chan

The BSP bills attracted only P86.339 billion in total bids, below the P100 billion auctioned off but slightly above the P86.003 billion in tenders for the P80-billion offer a week prior. The central bank accepted all the submitted bids for a partial award.

Broken down, tenders for the 28-day BSP bills reached P35.042 billion, lower than the P40 billion placed on the auction block but higher than the P30.119 billion in demand for the P30-billion offer the prior week.

Accepted yields were from 5.25% to 5.4%, a tad wider than the 5.255% to 5.4% margin seen a week prior. This caused the average rate of the one-month securities to go up by 1.01 basis points (bps) to 5.3555% from 5.3454% previously.

Meanwhile, bids for the 56-day bills totaled P51.297 billion, below the P60-billion offer and the P55,884 billion in tenders for the P50 billion auctioned the previous week.

Banks asked for rates from 5.265% to 5.34%, wider than the 5.29% to 5.34% band last week. With this, the weighted average accepted yield of the two-month papers edged up by 0.08 bp to 5.3114% from 5.3106%.

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.