BSP bills’ yield drops on strong demand

THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities fetched a lower average rate again on Friday as demand for the offer remained high.

Total bids for the 28-day BSP bills reached P117.768 billion, nearly twice the P60 billion placed on the auction block and slightly higher than the P117.7 billion tenders seen for the P40 billion offered in the previous auction.

The bid-to-cover ratio was at 1.9628 times, down from 2.9425 in the prior week.

Still, the BSP fully awarded its P60-billion offering.

Accepted yields were at the 4.29% to 4.35% range, narrower and lower than the 4.333% to 4.443% band fetched a week prior. This caused the weighted average accepted rate for the 28-day bills to go down by 2.85 basis points week on week to 4.3391% from 4.3676%.

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 done through overnight reverse repurchase facility, 18.2% via the overnight deposit facility, and 9% from the term deposit facility. — Katherine K. Chan