BSP bills offered lower; 1.52x oversubscribed

Published May 28, 2021, 5:55 PM

by Lee C. Chipongian

The central bank’s securities auction this week have a lower volume but it remained oversubscribed by 1.52x at P152.15 billion.

The Bangko Sentral ng Pilipinas (BSP) bills was offered at P100 billion compared to the previous Friday’s P110 billion.

“The BSP adjusted the 28-day bill offer volume (but the) auction was awarded in full, amid strong demand from market participants,” said BSP Deputy Governor Francisco G. Dakila Jr.

“There was oversubscription by 1.52x the offered amount as total bids reached P152.15 billion. This led to a decline in the weighted average interest rate which fell by 0.422 bp (basis point) to 1.7704 percent,” noted Dakila.

Dakila also said the range of yields accepted “shifted a little lower and narrowed slightly” to 1.750 percent to 1.780 percent compared from 1.753 percent to 1.790 percent last May 21.

“The results of the BSP bill auction continue to reflect normal market conditions amid sustained ample liquidity in the financial system,” he added.

The bid coverage ratio this week rose to 1.5215 from 1.2282 previously, indicating increased market appetite for the lone BSP bills.

The 28-day tenor was first offered as a liquidity facility on September 18, 2020 to “steer short-term market interest rates towards the policy rate and influence liquidity conditions in the financial system.”

The revised BSP Charter, signed into a new law in 2019, restored the BSP’s authority to issue its own debt instruments which are negotiable securities as part of its regular monetary operations.

Prior to the charter amendment, the last time the BSP issued its own bills was in 1993.