THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded P60 billion in short-term securities on Friday as investors asked for lower yields following a downward correction in rates of benchmark tenors.
The 29-day bills auctioned off by the BSP on Friday were oversubscribed as demand reached P121.725 billion. This is also slightly more than the P120.55 billion in tenders logged the previous week.
The central bank has made full awards of its weekly offer of bills for eight consecutive weeks or since it started to issue its own securities in mid-September.
Accepted rates ranged from 1.98% to 2%, a slightly lower margin than the 1.99% to 2.075% band logged on Oct. 30. This caused its average rate to settle at 1.9922%, 4.45 basis points lower than the 2.0367% seen a week ago.
“Amid sustained strong demand and lower offer volume, majority of the bids received shifted to the low end of the accepted yields following the results of last week’s auction wherein most of the bids were cut off,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
The short-term securities are among the central bank’s tools to shore up excess liquidity and better guide short-term interest rates.
The lower yields fetched for the BSP bills followed the trend seen in US and local bond rates, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
“The 10-year US government bond yield eased to 0.76%,…down from a high of 0.94% on Nov. 4 as the US presidential election between [Joseph R.] Biden and [President Donald J.] Trump turned out to be tight, thereby reducing the odds of a larger US stimulus as advocated by the Democrats,” Mr. Ricafort said in a text message. — LWTN