Central bank securities fetch higher average rate despite oversubscription

THE BANGKO SENTRAL ng Pilipinas’ (BSP) short-term securities were quoted at a slightly higher average rate on Monday even as the offer was met with strong demand.

Total bids for the 28-day BSP bills reached P54.326 billion, exceeding the P40 billion placed on the auction block. This was also higher than the P50.676 billion in tenders for the P50-billion offer on March 27.

The auction was held outside of the usual Friday schedule due to non-working days in observance of Holy Week.

“The BSP reduced the offer volume from P50 billion in the previous week to P40 billion,” the central bank said in a statement. “Total tenders reached P54.3 billion, resulting in a bid-to-cover ratio of 1.36x.”

The bid-to-cover ratio climbed from the 1.0135 logged previously.

As a result, the BSP made a full P40-billion award of the one-month securities.

Accepted yields were from 4.475% to 4.58%, narrowing from the 4.43% to 4.6125% margin seen in the previous auction. This led the average accepted rate of the one-month bills to edge up by 0.74 basis point week on week to 4.5265% from 4.5191%.

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