BSP raises P60B from securities sale

The Bangko Sentral ng Pilipinas (BSP) has generated P60 billion from its weekly auction of its own securities.

Data from the central bank showed on Friday that its offer of P60-billion securities was twice oversubscribed after attracting bids worth P121.72 billion.

The BSP fully awarded P60 billion worth of one-month BSP bills. This resulted in a weighted average interest rate of 1.9922 percent, 4.451 basis points lower than last week’s rate.

“Amid sustained strong demand and lower offer volume, majority of the bids received shifted to the low end of the accepted yields following the results of last week’s auction, wherein most of the bids were cut off,” Bangko Sentral Deputy Governor Francisco Dakila Jr. said in a statement.

The accepted yields remained narrow at 1.980-2.000 percent. The bills will mature on December 9.

Dakila said the auction results indicated that liquidity in the country’s financial system remained ample.

“The BSP will continue to be guided by its assessment of market developments and liquidity conditions in the conduct of its monetary operations going forward,” he added.

BSP securities are monetary instruments issued by the central bank under the interest rate corridor framework for its monetary policy implementation and liquidity management operations.

The Bangko Sentral explained that its securities would also add to the pool of risk-free assets in the financial system, alongside those issued by the government that can be traded for liquidity purposes.

“Through the regular auction of BSP securities, the issuance of [such] securities can contribute to improved price discovery for debt instruments and support monetary policy transmission in the process,” it said.

The Bangko Sentral’s authority to issue negotiable certificates of indebtedness, even in normal times, was restored by Republic Act (RA) 11211. Signed into law in February 2019, RA 11211 amended RA 7653, or the “New Central Bank Act of 1993.”

Before the amendment, its debt offerings were only allowed in cases of extraordinary price movements.