BSP readies bond sale in Q1

Published January 5, 2020, 12:00 AM

by manilabulletin_admin


The Bangko Sentral ng Pilipinas (BSP) is about to complete arrangements with the Bureau of the Treasury (BTr) for the first quarter soft launch and market campaign for its bond offer.

“We are still working out the mechanism with BTr because we need to tie up with BTr and RoSS (National Registry of Scripless Securities). Right now, we’re coordinating with BTr and setting arrangements with their provider,” said BSP Assistant Governor for the Monetary Policy Sub-Sector, Iluminada T. Sicat.

The BSP will be using BTr-RoSS as platform for the auction and registry of its bonds when these are issued in the second quarter this year.

The BSP is already starting market consultation, according to Sicat. As for the BTr-RoSS, she said the BSP is completing arrangements with the provider of the BTr facility.

She reiterated that the BSP is still on target to sell its own BSP securities in the second quarter while a soft launch is expected within the first quarter.
The BSP bonds’ soft launch entails a public information campaign and market consultation on how it is going to be done, said Sicat.

The BSP is also open to the possibility that the bond sale could begin earlier than planned. “We want everything to be in order,” said Sicat.

The BSP currently has the weekly term deposit facility (TDF) auctions with three tenors: The 7-, 14-, and 28-day. The volume size is at ₱90 billion as of its most recent auction. Its highest offer since it was first launched in mid-2016 was at ₱190 billion.

Sicat echoed what BSP Deputy Governor Francisco G. Dakila Jr. said previously that the TDF will complement the securities issuance as monetary policy instruments. “(There) may be volatilities that are very short term (in nature) and we would like to make sure that (the TDF) is available for us when we need it,” she said.

This first quarter, the BSP will be busy with its market-sounding exercises. “We will have to inform banks the difference between (BSP) bonds and the NG (National Government) bonds, and also explain about operational issues,” said Sicat.

BSP Governor Benjamin E. Diokno said the timing of its bond issuance will depend on price stability and growth outlook, but he wants it done as soon as possible. “(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 back in November.

The BSP bond tenor is still under discussion with market participants. 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.