One-month securities of the Bangko Sentral ng Pilipinas (BSP) gained higher average rates on Friday despite strong demand as it partially rewarded gains to limit the rise in approved yields.
The 28-day BSP bills attracted bids worth P101.405 billion, up from the P90 billion auctioned and P67.024 billion tendered for the same offer volume a week earlier. However, the central bank awarded only P81.405 billion in papers.
Yields agreed ranged from 4.968% to 5.045%, lower than the 4.95% to 5.05% band seen in the previous auction. With this, the weighted average acceptance rate of 28-day papers increased by only 0.66 basis points to 5.0106% from 5.0040%.
BSP did not offer a period of 56 days for the fifth consecutive week. It last auctioned 28-day and 56-day BSP bills on October 24.
The central bank uses BSP securities and its term deposit facility to eliminate excess liquidity in the financial system and better guide short-term market rates towards its policy rate.
The regulator said the BSP bill also contributes to better price discovery for debt instruments while supporting monetary policy transmission.
The central bank began auctioning short-term securities weekly in 2020, initially offering only 28-day tenors and adding 56-day bills in 2023.
In August, BSP Governor Eli M. Remolona, Jr. said he was gradually moving away from issuing short-term paper to manage liquidity as he wanted to boost activity in the money market.
The central bank's data showed that about 50% of its market operations are conducted through its short-term securities. , KK Chan
