BW FILE PHOTO

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities ended mixed on Friday as both tenors were oversubscribed.

The BSP bills fetched bids amounting to P136.922 billion on Friday, higher than the P110-billion offer and the P119.984 billion in tenders for the P120-billion auctioned off on June 27. Both tenors were fully awarded.

Tenders for the 28-day BSP bills reached P61.221 billion, above the P50 billion placed on the auction block and the P58.887 billion in bids seen for a P60-billion offer seen the prior week. The BSP accepted all the submitted bids.

Banks asked for rates ranging from 5.35% to 5.536%, a narrower margin compared to the 5.35% to 5.6% band seen a week earlier. This caused the average rate of the one-month securities to inch down by 0.83 basis point (bp) to 5.4662% from 5.4745% previously.

Meanwhile, bids for the 56-day bills amounted to P75.701 billion on Friday, higher than the P60-billion offering but lower than the P61.097 billion in tenders for the same offer volume in the prior week. The central bank made a full P60-billion award of the two-month securities.

Accepted rates were from 5.375% to 5.546%, a tighter range compared to the 5.37% to 5.565% margin seen the week prior. With this, the average rate of the 56-day securities rose by 8.42 bps to 5.5854% from the 5.5012% logged in the previous auction.

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to better guide short-term market rates towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission, the central bank said.

Data from the central bank showed that around 50% of its market operations are done through its short-term securities.

The BSP bills are considered high-quality liquid assets for the computation of banks’ liquidity coverage ratio, net stable funding ratio, and minimum liquidity ratio.

They can also be traded on the secondary market. — Aaron Michael C. Sy