The Philippine central bank raised P50 billion in short-term securities on Friday amid sustained investor demand.
The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day bills it offered on Friday from total bids worth P87.51 billion, according to a notice posted on its website. The auction was oversubscribed, against the initial plan to raise just P50 billion.
This was the third straight month the central bank fully awarded the debt paper it offers after the launch of its own securities on Sept. 18.
The past three auctions were all oversubscribed as well.
“The sustained market interest for the BSP bill reflects ample liquidity in the financial system,” BSP Deputy Governor Francisco G. Dakila, Jr. said in an e-mailed statement. “The BSP’s monetary operations will remain guided by its assessment of liquidity conditions and market developments.”
The bills fetched yields of 1.825% to 1.86%, wider than 1.83-1.85% in the auction last week. The debt had an average rate of 1.8423%, slightly higher than 1.8422% last week.
Ruben Carlo O. Asuncion chief economist at UnionBank of the Philippines, Inc. said the accepted yield was higher than Bloomberg Valuation Service reference rates. “This means that the market is really looking for opportunities to earn and this new product from the BSP seems to provide the need.”
The rate of the one-month tenor closed at 1.018% on Friday based on the Bloomberg Valuation Service reference rates published on the Philippine Dealing System’s (PDS) website.
Mr. Asuncion said the result of the latest auction shows that the market remains awash with cash.
The central bank on Thursday kept benchmark interest rates unchanged due to benign inflation and ample liquidity in financial markets. The pause was also expected to give the economy more time to absorb the monetary measures it had rolled out.
The BSP’s overnight reverse repurchase, lending and deposit facilities are still at their record lows of 2.25%, 2.75% and 1.75%, respectively.
Liquidity infusion from the central bank’s monetary policy measures has hit P1.5 trillion, equivalent to 7.6% of the gross domestic product (GDP). — Beatrice M. Laforga