BSP throws P100B from titles

THE Bangko Sentral ng Pilipinas (BSP) has raised 100 billion pesos in its weekly securities auction.

The central bank’s one-month BSP bill was oversubscribed by 1.05 times the offered volume of 100 billion pesos, for a total of 105.41 billion pesos in tenders.

The slightly higher WAIR (Weighted Average Interest Rate) for this auction follows the expected increase in the supply of government bonds as the government announced a higher borrowing plan for June 2021, ”BSP Deputy Governor Francisco Dakila Jr. said in a statement.

The government plans to borrow 170 billion pesos from domestic sources this month, according to the borrowing schedule provided by the Treasury Office during the last week of May.

If executed as planned, the program would exceed the 170 billion pesos set for May and June 2020.

From this figure, the government would raise 75 billion pesos by issuing treasury bills (T-bills) and 140 billion pesos by issuing treasury bills (T-bonds).

Meanwhile, the weighted average interest rate on the BSP bill jumped 1.532 basis points to 1.7857%, according to Dakila. The range of accepted bids remained low, but widened to 1.750-1.973%.

“Nonetheless, interest rates remain low in a context of abundant and sustained liquidity in the financial system. For its part, the BSP’s monetary operations will continue to be guided by its assessment of the latest liquidity conditions and market developments,” a- he assured.

BSP securities are monetary instruments issued under the interest rate corridor for its monetary policy implementation and liquidity management operations.

The securities would also add to the financial system’s pool of risk-free assets, alongside those issued by the government that can be traded for liquidity purposes.

Through regular auctions of BSP securities, the issuance of these securities can contribute to better discovery of the prices of debt instruments and support the transmission of monetary policy in the process.

Its power to issue negotiable debt securities, even in normal times, was restored by the law of the Republic (RA) 11211. Enacted in February 2019, RA 11211 amended RA 7653, or the “New Law on the central bank of 1993 “.

Prior to the amendment, central bank debt offers were only allowed in the event of extraordinary price movements.

Bangko Sentral Governor Benjamin Diokno said earlier that monetary authorities continued to seek improvements in the stocks and improve their pro-market characteristics.

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