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THE BANGKO SENTRAL ng Pilipinas (BSP) granted all of the one-month bills it offered on Friday, even as rates rose following data showing a faster inflation impression for February.
The central bank raised P80 billion as planned from its offering of 28-day bills that were met with P106.674 billion in tenders, more than the P102.12 billion in offers recorded last week.
Accepted rates for the securities ranged from 1.725% to 1.95%, a narrower range compared to the 1.665% to 1.995% band seen last week. The average rate of the papers was 1.8%, 6.97 basis points higher than the 1.7303% seen previously.
The central bank uses both BSP securities and term deposits to absorb excess liquidity from the financial system and better target short-term market rates.
“The increase in the rate of the BSP bills can be attributed to the continuous search for performance of market participants amid the ongoing issuance of retail Treasury bonds (RTBs), as well as the market reaction to the February inflation data recently released, “BSP Lieutenant Governor Francisco G Dakila, Jr. said in a statement.
The government sold P463.3 billion in retail three-year Treasuries. Broken down, P411.8 billion was fresh funds or “new money,” while P51.5 billion was raised under the bond swap program.
Meanwhile, headline inflation stood at 4.7% in February, beyond the central bank’s 2-4% target and faster than January’s 4.2%. It was also the fastest since printing 5.1% in December 2018.
Rates on central bank securities rose as yields on US Treasuries registered, Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said in a text message.
Yields on 10-year US Treasuries stood at around 1.55% on Thursday, Reuters reported. It peaked at 1,614% on February 25. LWT Noble
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