BSP generates P100B from securities sale

THE Bangko Sentral ng Pilipinas (BSP) secured P100 billion from its weekly securities auction.

The central bank’s one-month BSP bill was oversubscribed by 1.21 times the offered volume of P100 billion on Friday, with total offers totaling P120.92 billion.

“The results of the auction continue to support the view that market conditions remain normal amid sustained ample liquidity in the financial system,” BSP Deputy Gov. Francisco Dakila Jr. said in a statement.

He added the weighted average interest rate continued to fall amid strong market interest, settling at 1.7739 percent, down 0.947 basis points from the previous week’s rate. Accepted yields moved lower as well, but the range increased to 1.763 to 1.800 percent.

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

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