P100B raised from BSP securities auction

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The Bangko Sentral ng Pilipinas (BSP) raised P100 billion in its weekly securities auction.

 

The central bank’s one-month BSP bill was oversubscribed by 1.82 times its intended volume of P100 billion, resulting in bids reaching P182.21 billion.

 

The weighted average interest rate on the 28-day BSP bill was 1.8022 percent, down from 1.8115 percent last week. During the auction, the yields accepted were slightly lower and remained narrow at 1.7950-1.8086 percent.

 

According to BSP Deputy Governor Francisco Dakila Jr., the Bangko Sentral’s monetary operations would continue to be guided by its most recent assessment of liquidity conditions and market developments.

 

Under the interest rate corridor framework, BSP securities are monetary instruments issued by the central bank for monetary policy execution and liquidity management operations.

 

The securities would add to the pool of risk-free assets in the financial system, alongside government-issued securities that could be exchanged for liquidity.

 

The issuance of such securities can aid price discovery for debt instruments and improve monetary policy transmission by allowing Bangko Sentral securities to be auctioned often.

 

Republic Act (RA) 11211 restored the central bank’s authority to issue negotiable certificates of obligation even under normal circumstances. The “New Central Bank Act of 1993,” also known as RA 11211, was signed into law in February 2019.

 

Prior to the amendment, the BSP could only make debt offers in the event of significant price swings.

 

BSP Governor Benjamin Diokno previously stated that the monetary authorities were still searching for methods to improve and market-friendly securities.

BY MEYNARD DELA CERNA

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