BSP raises P120 billion at bill auction

The Philippine central bank raised P120 billion in short-term securities on Friday due to strong demand. 

In a notice posted on its website, the Bangko Sentral ng Pilipinas (BSP) said it had fully awarded the 28-day bills it auctioned off out of total bids worth P129.1 billion. 

The auction was the fifth straight time the central bank had fully awarded the debt paper after it started selling its own securities on Sept. 18. 

Investors sought rates between 1.85% and 2.25%, wider than 1.84-1.86% at last week’s auction. The debt had an average rate of 1.8956%, 7.56 basis points higher than 1.82% in the previous auction. 

“Demand for the BSP bills remained strong amid ample financial liquidity,” central bank Deputy Governor Francisco G. Dakila, Jr. said in a statement..”Looking ahead, the BSP will remain guided by its assessment of recent market developments and liquidity conditions in the further refinement of its monetary operations.” 

Large bids at the weekly auctions of both the central bank and Bureau of the Treasury showed that the market remained awash with cash, prompting the BSP to mop it up by increasing its debt offers, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message on Friday. 

“However, the 28-day BSP security auction yields have already gone up gradually in recent weeks from unusually low levels, after announcements from the Department of Finance, which signaled preference for commercial borrowings and possibly more borrowings from the BSP by the National Government for 2021,” he added. 

The rate of the one-month paper ended at 1.068% on Friday, based on the Bloomberg Valuation Service reference rates published on the Philippine Dealing System’s (PDS) website. 

Finance Secretary Carlos G. Dominguez III on Wednesday said the National Government might still borrow more from the central bank next year to plug some of its short-term funding requirements. 

The government plans to borrow P3 trillion this year to plug its ballooning budget deficit that is expected to hit 9.6% of economic output. — Beatrice M. Laforga