Yield of BSP bills continue to rise

Published August 5, 2022, 3:23 PM

by Lee C. Chipongian

The average rate of the central bank’s 28-day securities continue to increase at 3.6439 percent on Friday, Aug. 5, based on Bangko Sentral ng Pilipinas (BSP) data.

The yield was 13.1090 basis points (bps) higher compared to July 29’s 3.5129 percent. The rates accepted shifted higher and widened slightly to a range of 3.5000-3.7500 percent on Friday.

Meantime, the BSP bills’ auction was oversubscribed by 1.01x to P172.41 billion against offer of P170 billion. The volume was higher compared to last week’s P150 billion offering.

“The results of the BSP bill auction continue to reflect the pass-through of the recent policy rate increase on short term rates. Moreover, market participants may also be looking forward to the expected Retail Treasury Bond issuance later this month. In view of this, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” said BSP Deputy Governor Francisco G. Dakila Jr.

The BSP’s Monetary Board has raised the benchmark rate by 125 bps since May 19. The last rate hike of 75 bps on July 14 was an off-cycle move. The current BSP rate is at 3.25 percent.

The BSP’s securities facility was introduced in September 2020, one of the BSP’s key liquidity-mopping tools to manage inflation. As of end-July, inflation average stood at 4.7 percent, above the government target of two percent to four percent for 2022.