The Bangko Sentral ng Pilipinas (BSP) auction of 28-day BSP bills continue to attract a lower yield but is still oversubscribed by 1.37 times last Friday, Jan. 28.
BSP Deputy Governor Francisco G. Dakila Jr. said the BSP kept the offered volume at P100 billion “amid sustained demand from market participants.”
Total tenders amounted to P137.4 billion which was equivalent to 1.37x of the auction offering, said Dakila. Last week’s bids were however lower compared to the previous Friday’s results of P174.22 billion. The bid coverage ratio on Jan. 28 stood at 1.3740.
“The weighted average interest rate continued to decline, settling lower from last week’s rate by 2.440 bps (basis points) to 1.6809 percent. The yields accepted in today’s auction likewise shifted lower but widened to a range of 1.6000-1.7100 percent,” he also said.
Dakila further noted that the BSP bill auction results “continue to show that liquidity in the financial system remains ample, with short-term market interest rates remaining low.”
The BSP securities facility was launched in September 2020, to address the excess liquidity that was being released as part of the central bank’s anti-pandemic response.
BSP bills as a liquidity mopping-up tool is used to control and manage inflation. The country's inflation rate rose 4.5 percent by end of 2021, above the target of two-four percent.