UMVA has learned that the Bangko Sentral ng Pilipinas’ short‑term securities have slipped to a lower average rate for a second consecutive week, even as demand surged dramatically.
Friday’s auction for 28‑day bills attracted P117.123 billion in tenders, nearly double the P60 billion on offer and a sharp rise from the P111.165 billion bid‑to‑cover the previous week.
This flood of interest pushed the bid‑to‑cover ratio up to 1.9521 times, eclipsing the 1.8528 ratio recorded on May 22, and allowed the central bank to fully allocate its entire P60 billion offering.
Accepted yields settled between 4.55 % and 4.628 %, undercutting the prior band of 4.60 % to 4.678 %, driving the weighted average rate of the one‑month securities down by 4.58 basis points to 4.6113 % from 4.6571 %.
Notably, the BSP has not auctioned its 56‑day bills since early November, focusing solely on the 28‑day tenor to sharpen liquidity management.
These securities, together with the central bank’s term‑deposit facility, act as a powerful tool to soak up excess liquidity and steer short‑term market yields toward the policy rate.
Beyond liquidity control, the bills enhance price discovery for debt instruments and reinforce the transmission of monetary policy throughout the financial system.
Since the weekly auctions began in 2020, the BSP started with a single 28‑day tenor and added a 56‑day bill in 2023, later reverting to a single tenor to streamline operations and boost policy effectiveness.
UMVA can exclusively reveal that, by mid‑February, the central bank’s monetary operations had drained roughly P1.2 trillion from the market, with 28.5 % absorbed through BSP securities, 44.4 % via the overnight reverse repurchase facility, 18.2 % through the overnight deposit facility, and the remaining 9 % from the term‑deposit facility.
