The central bank’s Friday auction of 28-day securities fetched a lower rate amid demand, it received P109 billion tenders versus offer of P70 billion.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said demand for BSP bills reflects excess liquidity and market developments.

(Bloomberg FILE PHOTO)

Total tenders of P109 billion is equivalent to 1.56x of the P70-billion volume offered.

During Friday’s transactions, the yield of BSP bills dropped to 1.9343 percent from last 1.9630 percent last March 19.

“The BSP maintained its P70-billion offering (which) was fully awarded amid strong demand,” noted Dakila. This led to the decline in the weighted average interest rate by 2.864 basis points to 1.9343 percent, he said.

“The range of accepted yields shifted slightly higher and narrower at 1.875-1.989 percent,” added Dakila.

Last year, the BSP siphoned off P2 trillion of excess liquidity. A big amount or P1.14 trillion were placed in its overnight deposit facility. It accounted for 57 percent of the total. The term deposit facility accounted for 16.3 percent or P326 billion while its reverse repurchase facility absorbed 15.5 percent or P310 billion.

The BSP first offered BSP bills on September 18, 2020. By end-2020, the facility absorbed 11.2 percent or P224 billion of total liquidity that went back to the BSP.

To cushion the impact of the pandemic on the financial system, the BSP injected P2 trillion – equivalent to 11 percent of GDP – as bank funds.

BSP Governor Benjamin E. Diokno said in a forum Friday that amid an “ever-changing landscape (the) BSP constantly looks for ways to improve our conduct of monetary policy and financial sector supervision.”

He said that on the monetary front, the BSP’s issuance of its own debt securities improved the way they manage liquidity. “This increases BSP’s set of tools to manage liquidity in the economy, consistent with our price stability mandate,” he said.

Source: Manila Bulletin (