YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) short-term securities fell on Friday as both tenors went undersubscribed.
The BSP securities fetched bids amounting to P81.918 billion on Friday, lower than the P140-billion offer and P126.72 billion in tenders for the same volume auctioned off in the previous week.
Broken down, tenders for the 26-day BSP bills reached P32.891 billion, well below the P70-billion offer volume and P73.795 billion in bids a week ago.
Banks asked for yields ranging from 5.875% to 6.288%, wider than the 5.999% to 6.175% band seen a week earlier. This caused the average rate of the one-month securities to fall by 14.35 basis points (bps) to 5.9769% from 6.1204% previously.
Meanwhile, bids for the 54-day bills amounted to P49.027 billion, also lower than the P70-billion offering and P52.925 billion in tenders the week prior.
Accepted rates for the two-month tenor were from 5.9750% to 6.288%, also wider than the 6.04% to 6.2% margin seen a week ago. With this, the average rate of the notes dropped by 8.07 bps to 6.0826% from 6.1633% logged in the prior auction.
The tenors of the BSP bills were adjusted from the usual 28-day and 56-day maturities due to holidays.
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 market rates.
The BSP bills were calibrated to not overlap with the Treasury bill and term deposit tenors also being offered weekly.
Data from the central bank showed that around 50% of its market operations are done through the short-term BSP bills.
The BSP earlier said short-term instruments offer more stability and predictability.
These are also considered “high-quality liquid assets” and grants more flexibility for banks versus term deposits, which are not tradable. — Luisa Maria Jacinta C. Jocson