BSP bill yields rise for 4th straight week amid strong investor demand

YIELDS on Bangko Sentral ng Pilipinas’ (BSP) short-term securities edged higher for a fourth straight week even as investor demand remained strong.

The 28-day BSP bills drew P90.884 billion in tenders on Friday, well above the P70-billion offer and higher than the previous week’s P81.892 billion in bids for the same volume.

This lifted the bid-to-cover ratio to 1.3 times from 1.17 times a week earlier. The BSP awarded its full P70-billion offer.

Accepted rates ranged from 4.6% to 4.715%, slightly narrower than 4.495% to 4.728% a week earlier. The weighted average rate rose to 4.6651% from 4.6483%.

The BSP has not offered 56-day bills since Nov. 3.

The central bank uses its securities and term deposit facility to absorb excess liquidity and guide short-term rates toward its policy rate. BSP bills also help improve price discovery and strengthen monetary policy transmission.

The BSP started weekly issuances in 2020, initially with 28-day bills, later adding 56-day debt in 2023 before scaling back to a single tenor.

As of mid-February, BSP liquidity operations have withdrawn about P1.2 trillion from the financial system, mainly through reverse repurchase operations, term deposits and BSP securities. — Katherine K. Chan