Yields on short-term securities of the Bangko Sentral ng Pilipinas (BSP) continued to fall. Both periods were oversubscribed on Friday For the fourth consecutive week, with Central The bank is also reducing its offer volume.
Bids worth P125.798 billion were received Friday for the BSP bill, significantly higher than the P85-billion offer, but lower than the P151.634 billion sought by the P100 billion auctioned a week ago. The central bank provided both periods in full.
Broken down, tenders for 28-day securities reached P49.635 billion, higher than the P35 billion auctioned, but lower than the P60.051 billion bids previously seen for the P40-billion offer volume.
Banks asked for rates in the range of 4.9% to 5.16%, down from the 4.8% to 5.23% band seen a week ago. Due to this, the weighted average acceptance rate of one month bills declined by 6.09 basis points (bps) to 5.1184% from 5.1793% earlier.
Meanwhile, bids for 56-day securities were P76.163 billion, higher than the P50 billion placed on the auction block, but lower than the P91.583 billion in tenders for P60 billion.The lion was offered in the last auction.
Yields allowed ranged from 5% to 5.168%, lower than the 4.9% to 5.24% margin recorded last week. With this, the average rate on two-month bills declined by 7.31 bps to 5.1156% from 5.1887% earlier.
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 central bank said the BSP bill also contributes to better price discovery for debt instruments while supporting monetary policy transmission.
They are considered to have high quality liquid assets for calculating banks' liquidity coverage ratio, net stable funding ratio and minimum liquidity ratio. They can also be traded in the secondary market.
The central bank's data showed that about 50% of its market operations are conducted through its short-term securities.
BSP Governor Eli M. Remolona, Jr. earlier said that they are gradually moving away from short-term paper issuance in their liquidity management functions as they seek to boost activity in the money market. , Katherine K. chan
