BSP bills’ rate falls, still oversubscribed

Published November 13, 2020, 6:36 PM

by Lee C. Chipongian

The 28-day Bangko Sentral ng Pilipinas (BSP) bills auction yielded lower rate of 1.9621 percent, but it still remained oversubscribed with full P60 billion offer awarded.

Banks’ total tenders reached P88.90 billion which was 1.48 times the offer volume of P60 billion. The average rate fell by 3.009 basis points from 1.9922 percent.

BSP Deputy Governor Francisco G. Dakila Jr. said majority of the bids were lower and it had a “dispersed range of accepted yields” at 1.875 percent to 2.000 percent compared to the auction results of November 6 of 1.980 percent and 2.000 percent.

Dakila continue to say that the current results still “show ample liquidity in the financial system” and that the BSP’s monetary operations will be guided by its review and assessment of market developments and liquidity conditions.

This week’s bid coverage ratio for the BSP bills was at 1.4817, lower than last week’s 2.0288, indicating modest demand for the securities.

The BSP securities debutted on September 18, as one of BSP’s primary liquidity management tools. It is expected to mop up larger structural excess liquidity compared to the term deposit facility.

At the moment, the BSP is only offering one-month bills. Future offerings of other tenors or the longer-dated bonds will depend on banks’ appetite, officials said earlier.

The BSP securities are part of its open market operations (OMOs). These OMOs are outright purchases and sales of securities, foreign exchange swaps and issuance of BSP securities.

The last time the BSP issued its own securities was in July 1993. Its reintroduction in September however is just an operational refinement under the BSP’s interest rate corridor system, and not meant to change the central bank’s current monetary policy stance.