BSP bond sale hinges on inflation

Published November 24, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the timing of when to issue its own securities will depend on price stability and growth outlook.

MB file photo.
MB file photo.

The BSP’s inflation setting framework will also dictate how often the BSP will issue its own bonds which have been announced for the second quarter 2020 after a soft launch in the first three months of next year.

“(How often we issue bonds) will need to blend with the BSP’s framework on inflation targeting. That’s what we are waiting for,” Diokno said in Filipino.

Diokno said they are finalizing talks with the Bureau of Treasury (BTr) to link up the systems and line up the infrastructure for the BSP bond sale. The memorandum of agreement with the BTr is also being prepared. “We’re talking with BTR all the time,” he said.

I’m putting pressure (on BSP) to make it a reality because for the longest time, they were asking for that. So we will have a soft launch in the first quarter and (definitely) issue in the second quarter (of 2020),” Diokno added.

BSP Deputy Governor Francisco G. Dakila Jr. said the tenor is still being discussed and they are conducting market-sounding exercises beginning in January to get the market pulse on the maturities and volume to offer.

“The TDF (term deposit facility which is offered weekly) and bonds will be operating in different maturities. It’s a longer maturity (for the bonds),” said Dakila.

Banks prefer two-year tenor while the BSP is more inclined to offer one-year bonds because they could siphon off a bigger size of liquidity with a shorter-dated tenor than two years.

The BSP will also offer bonds “in small doses” at first, according to sources.

The BSP’s inflation targeting framework ensures it will achieve its primary objective of price stability “conducive to a balanced and sustainable growth of the economy.”

For 2020 and 2021, the BSP’s inflation forecast is 2.9 percent, it is within the two-four percent target for both years