BSP bills attract P160 B bids

The central bank’s securities facility was oversubscribed on Friday, Sept. 8, with P160.06 billion tenders versus offer of P150 billion.

Based on Bangko Sentral ng Pilipinas (BSP) data, the BSP bills had a higher volume compared to Sept. 4’s auction of P140 billion which was undersubscribed at P126.59 billion bids.

BSP Deputy Governor Francisco G. Dakila Jr. said in a commentary that they have observed “expected demand” in the BSP bills’ auction this week.

“Total tenders reached P160.060 billion, with the respective bid-to-cover ratios for the 28-day and 56-day BSP Bills at 1.007x and 1.232x,” he said.

The 28-day tenor was offered at P110 billion on Friday. It received P110.77 billion tenders resulting to a higher bid coverage ratio from the previous auction of P95.20 billion. The yield rose to 6.7211 percent.

Meanwhile, the 56-day securities had a higher volume of P40 billion from P30 billion previously. Tenders totaled P49.28 billion, up from Sept. 4’s P31.39 billion. The yield also went up to 6.7182 percent.

Dakila noted the weighted average interest rates (WAIR) for the awarded bids rose slightly from the previous auction.

“The WAIR for the 28-day BSP Bill went up marginally by 0.6529 basis point (bp) to 6.7211 percent whereas that for the 56-day (it rose) slightly by 0.0188 bp to 6.7182 percent,” he said.

Dakila also noted that the range of yields accepted for the 28-day and 56-day tenors narrowed to 6.7080 percent 6.7400 percent and 6.6500 percent to 6.7490 percent, respectively.

“The BSP’s monetary operations will continue to be guided by its assessment of prevailing liquidity conditions and market developments,” he reiterated.

The BSP first offered the 56-day tenor on June 30. It added another tenor to absorb an expected excess liquidity in the financial system after it removed a pandemic-related relief measure related to the reserve requirements of banks.

The BSP bills is part of the BSP’s interest rate corridor system. The securities facility is one of BSP’s primary tools to manage inflation by controlling the amount of liquidity in the financial system.

On Friday, the BSP also introduced the overnight (ON) reverse repurchase (RRP) auction. This will be a daily variable-rate auction to help the market in its price discovery formation and to boost money market activity. The BSP will have a daily report of the ON RRP rate which is an operational rate, after 12pm.