BSP raises P90B from bill auction

The Bangko Sentral ng Pilipinas (BSP) fully awarded the short-term securities it offered on Friday as rates declined after the government’s recent euro bond sale.

The central bank raised P90 billion from 28-day bills it auctioned off, with total tenders reaching P145.25 billion or 1.6 times as much as the initial offer. Total bids were also higher than P132 billion in the previous auction last week.

The one-month debt paper fetched an average rate of 1.8286{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af}, down by 2.76 basis points from a week earlier. Yields sought by investors ranged from 1.7925{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af} to 1.8440{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af}, lower than last week.

This marked the fifth straight month of decline for the rates of these short-term securities.

The Philippine central bank uses its short-term securities and term deposit facility to mop up excess liquidity from the system and guide short-term rates.

The lower yield was largely due to the recently concluded euro-denominated bond sale of the National Government after the jumbo issuance cut the need to borrow from the local debt market, Michael L. Ricafort , chief economist at Rizal Commercial Banking Corp. said said in a Viber message.

The low demand helped push domestic yields down, he added.

The government on Thursday raised €2.1 billion (P122.4 billion) from a triple-tranche offering of euro-denominated bonds. It sold €650 million worth of four-year global bonds, another €650 million worth of 12-year notes, and €800 million worth of 20-year debt.

Total tenders for the exercise reached €6.5 billion, or three times as much as the initial offer.

“The 28-day BSP securities yield also continued to ease amid the recent easing in the benchmark 10-year US Treasury yield to new one-month lows,” Mr. Ricafort said.

The peso’s continued appreciation against the dollar and easing inflationary pressures had also caused the yields of the central bank bills to fall, he added.

Inflation slowed to 4.5{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af} in March from 4.7{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af} in February as food price increases eased. But the central bank expects full-year inflation to hit 4.2{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af}, beyond its 2-4{87890dc1d933c52ccc13a444df81fd446339ba2106dac001aae390a0afd706af} target.

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