BSP bills’ rate drops further on oversubscription

THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities fetched a lower average rate for a second straight week as the offering attracted strong demand.

Tenders for the 28-day BSP bills hit P117.123 billion on Friday, nearly double the P60-billion offer and rising from the P111.165 billion in bids for the same volume auctioned off in the previous week.

This translated to a higher bid-to-cover ratio of 1.9521 times from the 1.8528 ratio seen on May 22.

As a result, the central bank fully awarded its P60-billion offering of securities.

Accepted yields were from 4.55% to 4.628%, lower than the 4.6% to 4.678% band logged during the previous auction. This caused the weighted average accepted rate of the one-month securities to fall by 4.58 basis points to 4.6113% from 4.6571% last week.

The BSP has not auctioned off the 56-day bills since Nov. 3.

The central bank uses the BSP securities and its term deposit facility to mop up excess liquidity in the financial system and to help guide short-term market yields towards its policy rate.

The BSP bills also contribute to improved price discovery for debt instruments while supporting monetary policy transmission.

The central bank began auctioning off short-term securities weekly in 2020, initially offering only a 28-day tenor and adding the 56-day bill in 2023.

In its February 2026 Monetary Policy Report, the central bank said it has limited its BSP securities offerings to a single tenor to rationalize its liquidity operations and focus on tenors that would boost monetary policy transmission.

As of mid-February, the central bank’s monetary operations have siphoned off P1.2 trillion in liquidity from the market. Of this, 28.5% was absorbed through BSP securities, while 44.4% was mopped up through the overnight reverse repurchase facility, 18.2% via the overnight deposit facility, and 9% from the term deposit facility. — Katherine K. Chan