Central bank sells P80 billion in short-term bills

THE BANGKO SENTRAL ng Pilipinas (BSP) made a full award of the one-month bills it offered on Friday even as rates climbed following data showing a quicker inflation print 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, higher than the P102.12 billion in bids logged 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 for the papers stood at 1.8%, higher by 6.97 basis points from the 1.7303% seen previously.

Both the BSP securities and term deposits are used by the central bank to mop up excess liquidity in the financial system and to better guide short-term market rates.

“The rise in the BSP bills’ rate can be attributed to market participants’ continued search for yield amid the ongoing issuance of retail Treasury bonds (RTBs) as well as market reaction to the newly released February inflation data,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The government sold P463.3 billion in three-year retail Treasury bonds. Broken down, P411.8 billion were fresh funds or “new money” while P51.5 billion were raised under the bond exchange program.

Meanwhile, headline inflation stood at 4.7% in February, beyond the central bank’s 2-4% target and faster than the 4.2% print in January. It was also the fastest since the 5.1% print in December 2018.

The rates of central bank securities increased as they tracked yields on US Treasuries, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Yields on the 10-year US Treasury bonds were at around 1.55% on Thursday, Reuters reported. It hit a high of 1.614% on Feb. 25. — L.W.T. Noble