BSP securities’ average rate rises despite strong demand

THE SHORT-TERM bills of the Bangko Sentral ng Pilipinas (BSP) fetched a higher average yield on Friday even as demand continued to increase.

Tenders for the 28-day BSP bills reached P85.659 billion, almost triple the P30 billion placed on the auction block and higher than the P70.215 billion in tenders for the same offer volume on June 19.

This was equivalent to a bid-to-cover ratio of 2.8553 times, higher than the 2.3405 ratio in the prior auction.

Following this, the central bank fully awarded its P30-billion offering even as the average yield increased.

Accepted rates for the one-month securities were between 4.6% and 4.741%, sharply higher and narrower than the 4.35% to 4.691% band in the prior auction. With this, the weighted average accepted rate climbed by 5.57 basis points to 4.7031% from 4.6474% previously.

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.

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% from the term deposit facility.

The BSP has significantly reduced its weekly offers of one-month securities after the National Government this month began offering cash management bills alongside regular Treasury bills to help manage its funding needs. The cash management bills have 35-day and 63-day tenors. — Aaron Michael C. Sy