THE CENTRAL BANK fully awarded its offer of 28-day bills on Friday as demand remained strong, with investors positioning amid expectations of recovery next year.
The Bangko Sentral ng Pilipinas (BSP) on Friday sold the programmed P80 billion in 28-day securities as its offer was oversubscribed, with tenders reaching P127.35 billion.
However, this was lower than the P141.25 billion in bids seen in the previous week’s auction.
This is the 14th consecutive week that the BSP made a full award of its offer of short-term securities.
Rates for the BSP bills ranged from 1.6699% to 1.69%, lower than the 1.68% to 1.7% band logged in the previous auction. As a result, the average rate of the securities dropped to 1.6837%, down 0.84 basis point from the 1.6921% recorded a week ago.
The bills and term deposits are tools used by the central bank to better guide market interest rates and gather excess liquidity in the financial system.
BSP Deputy Governor Francisco G. Dakila, Jr. said demand for the short-term securities was spurred by strong money supply in the economy.
“The sustained strong market interest for the BSP bills reflect the ample liquidity in the financial system,” Mr. Dakila said in a statement on Friday.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the decline in tenders this week from the previous auction shows that investors are repositioning based on their outlook for next year, as short-tenored papers used to see higher demand.
“The theme is repositioning for the 2021 recovery. Market is winding down and preparing for a rebound next year,” Mr. Asuncion said in a Viber message.
Bids for the BSP’s 13-day term deposits auctioned off on Wednesday also declined to P334.459 billion, below the P340-billion offering as well as the P401.251 billion in tenders logged on Dec. 9. — L.W.T. Noble