The Bangko Sentral ng Pilipinas’ (BSP) securities auction last Friday, Dec. 4, fetched a higher yield while bids were slightly oversubscribed.

BSP Deputy Governor Francisco G. Dakila Jr. said the demand for BSP bills reflected market liquidity which was also diverted to treasuries.

BSP Deputy Governor Francisco G. Dakila Jr.

“The results of the BSP bill auction show that financial system liquidity continues to remain ample amid the short-term impact of the recent issuance of Retail Treasury Bonds,” said Dakila.

During Friday’s auction, the offer was still P100 billion for the 28-day BSP bills.

Total tenders reached P102.042 billion which is equivalent to about 1.02x the offering, said Dakila. This was lower than the previous (Nov. 26) bids of P126.25 billion which was 1.26x oversubscribed.

As for the yield, compared to the rate last week, the weighted average interest rate increased by 10.5 basis points to 1.8749 percent.

“The yields accepted likewise shifted higher and widened to a range of 1.7600-2.0900 percent,” noted Dakila.

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 its liquidity mopping-up tool to manage inflation.