BSP bills undersubscribed this week

The central bank’s 28-day securities were undersubscribed and off the P190 billion offer, receiving only P106.495 billion in bids or 0.56 times the volume offered.

The Bangko Sentral ng Pilipinas (BSP) accepted P94.445 billion on Friday, Jan. 27. Banks and other eligible participants to the securities facility offered a lower bid this week compared to P230.21 billion on Jan 20.

PH peso/Manila Bulletin article photo

“The results of the BSP bill auction came following market participants’ expectations of client funding requirements, with some recalibrating their asset portfolios,” said BSP Deputy Governor Francisco G. Dakila Jr.

The BSP bills’ weighted average interest rate rose by 0.8125 basis point to 6.3545 percent. The yields accepted shifted higher but narrowed to a range of 6.1500-6.4250 percent, noted Dakila.

The BSP securities facility is one of the central bank’s monetary instruments to manage liquidity. It was first introduced in September 2020.

The BSP’s primary monetary policy toolkit is the interest rate on its RRP facility. Through the RRP, the BSP borrows money from banks using government securities as collateral.