The central bank’s auction of securities on Friday, July 22, was oversubscribed by 1.53 times amid sustained market interest, said Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr.
The 28-day BSP bills was offered at P150 billion which was the same volume last July 15. It received P229.37 billion tenders, lower compared to the previous auction’s P236.25 billion.
This was still a “good demand” from eligible participants, said Dakila, with bids oversubscribed by about 1.53x the volume offering. The bid coverage ratio of 3.4500 was higher than last week’s 1.5750.
The weighted average interest rate rose by 5.4181 basis points to 3.4500 percent, or up from 3.3958 percent last week. “The yields accepted during the auction shifted higher but narrowed to a range of 3.2000-3.5168 percent,” noted Dakila.
Dakila reiterated that BSP bills’ auction “reflect normal market conditions, supported by ample liquidity in the financial system” and that BSP’s monetary operations “will continue to be guided by its assessment of the latest liquidity conditions and market developments.”
The securities facility only has one tenor since it was introduced in September 2020. It mops up liquidity as one of BSP’s inflation management tool.
At the moment, the BSP has ongoing reviews of its liquidity facilities and its government securities purchasing window as part of normalization and pandemic exit strategy.
The BSP restored its authority to issue securities in 2019 when the central bank charter was amended. The facility helps the central bank maintain monetary stability under the interest rate corridor framework for monetary operations.