The auction of the central bank’s 28-day securities on Friday, Sept. 2, fetched a slightly higher interest rate of 4.0596 percent versus the previous 4.0260 percent.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said there was sustained “good demand” for the BSP bills.
“The results of the BSP bill auction show stable liquidity conditions even as short-term interest rates adjust following the recent BSP policy rate hike as well as expectations of continued tightening from key central banks. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” said Dakila.
Bids amounted to P141.45 billion against the offer of P100 billion. Tenders were lower compared to P147.62 billion last Aug. 26. The bid coverage ratio also dipped to 1.4145 from 1.4762 previously.
Dakila said demand from eligible market participants remained stable. The auction results were 1.41x oversubscribed.
“The weighted average interest rate for the BSP bill continued to increase from last week’s rate, rising by 3.3527 bps (basis points) to 4.0596 percent. The yields accepted remained broadly unchanged at a range of 3.8800-4.1000 percent,” said the BSP official.
The BSP securities facility was first introduced in September 2020 to help the BSP siphon off excess liquidity from its pandemic relief measures, including the reduction in banks’ reserve requirement ratio at the time.
Yield of the BSP bills has been increasing following the BSP’s rate hikes. The policy rate is currently at 3.75 percent. The BSP has lifted the benchmark rate by 175 bps since May this year.