BSP yields P90B from securities sale

THE Bangko Sentral ng Pilipinas (BSP) has raised P90 billion from the weekly auction of its own securities.

Central bank data showed over the weekend that its one-month BSP Bill was oversubscribed by 1.47 times the offered volume of $90 billion, with total bids amounting to P131.97 billion.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said “the auction results remain in line with the observed market normalization amid continued ample liquidity in the financial system.”

Amid strong demand, he added, the weighted average interest rate continued to slide, settling lower by 2.324 basis points to 1.8562 percent. The yields accepted also shifted lower and narrower, ranging from 1.838 to 1.875 percent.

Dakila, nevertheless, assured that “the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments.”

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

The 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.

Its 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, the BSP’s debt offerings were only allowed in cases of extraordinary price movements.

BSP Governor Benjamin Diokno said earlier that monetary authorities continued to seek enhancements to the securities and improve its market-friendly features.