The average interest rate of the Bangko Sentral ng Pilipinas (BSP) securities dropped to 1.7764 percent during Friday’s (Oct. 15) auction, while demand continued to be strong, according to BSP Deputy Governor Francisco G. Dakila Jr.
The BSP offered P100 billion of 28-day BSP bills and it attracted P139.05 billion worth of tenders. This was lower compared to the previous auction of P147.84 billion.
The securities were fully awarded amid good demand from eligible market participants, said Dakila. Tenders were 1.39x more than the offer volume.
“The auction results continue to reflect stable market conditions as liquidity in the financial system remain ample,” said Dakila. The bid coverage ratio dipped to 1.3905.
The weighted average interest rate continue to decline by 0.680 basis point to 1.7764 percent. “Compared to last week’s bill auction, the yields accepted remained low and narrowed further to a range of 1.7425-1.8000 percent,” he added.
To alleviate market worries and as part of pandemic response, the BSP has injected P2.3 trillion of bank liquidity into the financial system since March 2020. Bulk of this liquidity were placed back in the BSP’s open market operations including the term deposit facility and the BSP bills.
The BSP securities facility is one of the BSP’s liquidity mopping-up tool to manage inflation.