BSP increases securities auction volume

Published May 27, 2022, 3:40 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) increased the volume of its securities auction on Friday, May 27, to P150 billion versus P140 billion last week.

The BSP 28-day bills attracted P177.10 billion tenders, higher compared to P172.95 billion last May 20.

BSP Deputy Governor Francisco G. Dakila Jr. said the securities fetched a higher yield of 2.4109 percent this week from 2.3183 percent previously.

BSP Deputy Governor Francisco G. Dakila Jr.

The bid coverage ratio, despite an oversubscription, is lower at 1.1807 compared to 1.2353 last week indicating slower demand.

“The results of the auction show sustained good demand for the 28-day bill. Moreover, liquidity in the financial system remained ample,” said Dakila. He reiterated that the BSP’s monetary operations “will remain guided by its assessment of the latest liquidity conditions and market developments.”

This week’s tender at P177.1 billion is equivalent to about 1.18x the volume offering.

“The weighted average interest rate continued to increase from last week’s rate, rising by 9.261 bps (basis points) to 2.4109 percent. The range of yields accepted shifted higher with a generally unchanged range at 2.1875-2.5588 percent,” said Dakila.

The BSP restored its authority to sell its own bonds and bills on Feb. 14, 2019 when the amendments to the BSP Charter was signed into a new law or Republic Act No. 11211.

The central bank first offered the BSP securities facility in September 2020 with only a P20-billion offer. It was BSP’s first time to issue securities since the “JOBO” bills in the 1980s. The JOBO bills were named after the late governor, Jose B. Fernandez Jr. who served as the Central Bank of the Philippines’ governor from 1984 until 1990. In 1993, the central bank was renamed and reorganized as the BSP.

BSP securities are part of monetary operations under the interest rate corridor (IRC) framework for liquidity management in the financial system. As part of IRC, it helps implement monetary policy but it will not change the policy stance.