BSP fully awards 28-day bills

The Philippine central bank fully awarded short-term bills it sold on Friday as rates continued to decline on ample demand as the market awaits government updates on the country’s lockdown status. 

The Bangko Sentral Pilipinas (BSP) raised P100 billion from 28-day bills as total tenders hit P144.79 billion. The offer was 1.45 times oversubscribed, but demand eased from P152.98 billion at last week’s auction. 

The bills fetched an average rate of 1.721%, down by one basis point from a week ago. Yields sought by banks were 1.71% to 1.7305%, lower than 1.715 to 1.738% a week earlier. 

The central bank offers short-term debt and the term deposit facility to mop up excess liquidity in the financial system. 

Bill rates declined again as markets await the government’s decision on the quarantine classification for Metro Manila, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. 

Still, there was ample demand due to excess cash in the financial system. 

Metro Manila and other parts of the country experiencing a spike in infections are under a modified enhanced community quarantine until the end of the month as the threat of a more contagious Delta coronavirus variant persists. 

The Health department reported 17,447 coronavirus infections on Friday — the second-highest daily tally since the pandemic started last year — amid a fresh surge spurred by the Delta variant. 

A stricter lockdown could prompt investors to flock to safe assets such as government securities and BSP’s short-term bills, pulling down bond yields. — Beatrice M. Laforga 

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