The central bank raised the auction volume of 28-day securities on Monday, Feb. 27 to P160 billion from the previous week’s P140 billion but it was undersubscribed with a higher yield.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the “results of the BSP bill auction, which was moved to 27 February 2023 (Monday) after the declaration of 24 February 2023 (Friday) as a special non-working day in celebration of the EDSA People Power Anniversary, came as market participants tended to client and regulatory requirements.”
“Looking ahead, the BSP’s monetary operations will continue to be guided by its assessment of the prevailing liquidity conditions and market developments,” he reiterated.
The BSP bills was undersubscribed, attracting only P126.21 billion against offer of P160 billion. This was equivalent to 0.789x the volume offered.
Dakila said the BSP accepted P124.21 billion, with the weighted average interest rate rising by 8.5301 basis points (bps) to 6.5560 percent. “The yields accepted shifted higher but narrowed to a range of 6.4187-6.6500 percent,” he added.
Meanwhile, the bid coverage ratio was at 0.7889, lower compared to Feb. 17’s 1.4455, indicating weak demand.
The BSP bills was first introduced in 2020 as part of the interest rate corridor system that the central bank implemented in 2016. It complemented the term deposit facility as a liquidity management tool to control inflation.
Both facility brings BSP’s policy rate — currently at six percent — closer to market rates.
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