BSP earns P120B from securities sale

THE Bangko Sentral ng Pilipinas ( BSP) has generated P120 billion from its weekly auction of its own securities.

Data from the central bank showed on Friday that its offer of P120- billion securities was slightly oversubscribed after attracting bids worth P129 billion.

The Bangko Sentral offered and fully awarded P120 billion worth of 28- day BSP bills. This resulted in a weighted average interest rate of 1.8956 percent, 4.687 basis points higher than last week’s rate. The accepted yields were wider at 1.850 to 2.250 percent. Total tenders received amounted to P129.1 billion, equivalent to a bid- tocover ratio of 1.1 times.

The bills will mature on November 17.

BSP Deputy Governor Francisco Dakila Jr. said in a statement that demand for these bills remained strong amid ample financial liquidity.

“Looking ahead, the BSP will remain guided by its assessment of recent market developments and liquidity conditions in the further refinement of its monetary operations,” he added.

Security Bank Corp. Assistant Vice President and economist Robert Dan Roces said the latest auction results “show the continuing market interest and demand for the central bank bills as the facility evolves and become more integrated as a liquidity management tool by participants, [ and are] also quite indicative of liquidity levels.”

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.

BSP Governor Benjamin Diokno had said including the issuance of securities in the central bank’s standard monetary operations provided an additional tool for implementing monetary policy.

“This also promotes greater flexibility in managing liquidity in the financial system under the interest rate corridor framework,” he added.

Offering these securities will be useful for absorbing excess financial system liquidity that is structural in nature, according to Diokno.

Latest data showed that the country’s money supply, or domestic liquidity ( M3), rose by 14.2 percent year- on- year to P13.6 trillion in August, slower than the 14.7 percent in July. Month- on- month and seasonally adjusted, M3 was up 0.1 percent.

Diokno said issuing securities would help monetary authorities in guiding market interest rates along the short end of the yield curve.

“This strengthens the transmission of the BSP’s monetary policy stance to the rest of the economy,” he added.

MAYVELIN U. CARABALLO