Yields on BSP bills edge up

yields on bsp bills edge up - Yields on BSP bills edge up

By Luz Wendy T. Noble, Reporter 

Rates for the fully-awarded short-term debt instruments of the Bangko Sentral ng Pilipinas (BSP) slightly rose on Friday, following the trend set by Treasury papers.

Total demand for the P20-billion securities hit P69 billion, going beyond the P30 billion up for grabs, and the P43.36 billion in bids last week for the P20 billion maiden offering.

The BSP fully-awarded the 28-day bills at 1.83% to 1.85%, a narrower band compared to the 1.75% to 1.86% seen in the previous auction. Average rate stood at 1.8422%, higher by 0.67 basis point from the 1.8355 seen last week.

Investors have opted to park their funds in the central bank’s securities, as well as its term deposit facilities, overnight deposit facility, and the Treasury bills amid the lack of good outlets for excess liquidity, according to ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa.

“The slight uptick in yields was not substantial and may have simply reacted to the developments in the market with the Bureau of the Treasury (BTr) opting to reject longer dated auctions while still awarding shorter dates,” Mr. Mapa said in an e-mail.

The BTr rejected all bids for its reissued 10-year Treasury bonds with the market eyeing higher yields due to their expectations the BSP will likely keep rates steady next week.

The rates for the BSP securities will likely continue to follow the rates for T-bills and other BSP deposit facilities. The market will also pick up cues from the policy meeting of the Monetary Board on Oct. 1, he added.

BSP Governor Benjamin E. Diokno has previously hinted the policy stance may remain unchanged for the next few quarters given that they have already acted in anticipation of the crisis. Earlier this week, he said they will continue to be accommodative for at least the next two years amid uncertainties due to the pandemic.

The Monetary Board kept the overnight reverse repurchase, lending, and deposit facilities to record lows of 2.25%, 2.75%, and 1.75%, respectively in its previous policy meeting held in August after cutting  rates by a total of 175 basis points earlier this year.

The BSP has said it will gradually increase its bill offering based on market response and the liquidity situation in the market.

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