Yields on BSP still down, offer oversubscribed

Published May 8, 2021, 6:00 AM

by Lee C. Chipongian

The auction of Bangko Sentral ng Pilipinas (BSP) securities continue to be oversubscribed while the yield dropped anew ahead of next week’s Monetary Board policy meeting.

BSP Deputy Governor Francisco G. Dakila Jr. said Friday that the 28-day BSP bills auction attracted P116.02 billion bids against offer of P100 billion. “(The offered amount) was awarded in full amid strong demand from market participants,” he said.

(Bloomberg FILE PHOTO)

The demand for BSP bills resulted in the continued decline in the weighted average interest rate which fell to 1.7833 percent or 2.190 basis points lower than April 30’s 1.8052 percent, noted Dakila.

“Likewise, the yields accepted shifted lower to a narrow range of 1.770-1.800 percent,” he added. The total bids amounting of P116.02 billion is 1.16x of the offered volume.

Dakila also said the auction results also continue to show that market conditions remain normal amid ample liquidity in the financial system. The bid coverage ratio of 1.16102 was lower than last week’s 1.5150.

The BSP security facility was introduced in September last year. The 28-day tenor used to be the volume allotted for a term deposit facility. There are no other tenor offered for the BSP bills while the TDF has 7-day and 14-day tenors since it was first issued in 2016.