BSP bills’ yield drops for third straight week

THE CENTRAL BANK’S short-term securities’ average yield dropped for a third straight week on Friday as the offer continued to attract strong demand.

Bids for the 28-day bills offered by the Bangko Sentral ng Pilipinas (BSP) reached P117.2 billion, nearly double the P60 billion placed on the auction block and slightly above the P117.123 billion recorded in the previous week for the same offer volume.

With this, the bid-to-cover ratio was slightly higher at 1.9533 times from the 1.9521 ratio recorded a week prior.

“The offering was fully awarded, with accepted yields widening to a range of 4.5000%-4.5970%,” the central bank said in a statement.

The range of accepted rates for the one-month papers was wider and lower than the 4.55%-4.628% margin seen in the previous week. This caused the average accepted yield to decline by 2.77 basis points week on week to 4.5836% from 4.6113%.

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% were mopped up through the overnight reverse repurchase facility, 18.2% via the overnight deposit facility, and 9% with the term deposit facility. — Katherine K. Chan