BSP bills oversubscribed at P167 B

The central bank’s auction of 28-day securities were oversubscribed on Friday, Feb. 3 on a lower volume, and reversing the previous week’s below-offer tenders.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said they saw strong demand for the BSP bills as expected, due to banks’ asset rebalancing.

Bangko Sentral ng Pilipinas (BSP) logo as displayed at the BSP headquarter's "backdoor" entrance (Manila Bulletin photo).

“The results of the BSP bill auction came amid strong demand from market participants, who had previously noted that they would be reallocating some of their assets towards the BSP bill,” said Dakila.

On Friday, the BSP reduced the volume of its securities facility to P150 billion from P190 billion last Jan. 27. The auction was oversubscribed at P167.222 billion bids or equivalent to 1.115x the volume offered.

The BSP accepted P150 billion. The bid coverage ratio stood at 1.1148.

Meanwhile, the weighted average interest rate rose by 0.3826 basis point to 6.3584 percent from 6.3545 percent. The yields accepted ranged from 6.2000 percent to 6.4100 percent.

Since September 2020 when it started, the BSP securities facility is offering only one tenor or the 28-day which used to be the 28-day term deposit facility auctioned off every Wednesday.

The amended BSP Charter in 2019 allowed the BSP to issue its own securities again. This granted the central bank “greater flexibility” in managing the liquidity in the financial system and control inflationary pressures.

The issuance of BSP securities contribute to “improved price discovery for debt instruments and support monetary policy transmission in the process,” said the BSP.