THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities fetched a higher average rate on Friday even as market demand held strong.
Bids for the 28-day BSP bills amounted to P31.219 billion, exceeding the P20 billion placed on the auction block and the P27.105 billion in tenders for the same volume auctioned off last week.
This translated to a bid-to-cover ratio of 1.561 times, higher than the 1.3553 ratio previously.
With this, the central bank fully awarded P20 billion in securities.
Accepted rates for the one-month securities widened to 5% to 5.148% from the 5% to 5.113% range in the prior week. As a result, the weighted average accepted rate of the papers climbed by 2.93 basis points week on week to 5.0879% from 5.0586%.
The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to help guide short-term market yields towards its policy rate.
The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.
The central bank began auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.
It has now limited its BSP securities offerings to a single tenor to rationalize its liquidity operations and focus on tenors that would boost monetary policy transmission.
Based on its August 2026 Monetary Policy Report, the central bank’s open market operations have siphoned off P975.4 billion in liquidity from the financial system.
Of this, 14.8% was absorbed through BSP securities, while 45.6% was mopped up through the overnight reverse repurchase facility, 27.3% via the overnight deposit facility, and 12.3% from the term deposit facility.
The BSP said interest rates on its 28-day bills fully reflected the two 25-bp policy rate hikes it delivered in April and June. — Katherine K. Chan