BSP Bill Yields Rise Slightly as Auction Bids Decline Week on Week
Key Takeaways
- •The BSP partially awarded P39.5 billion of 28-day bills at its latest auction, with accepted yields ranging from 4.7200% to 4.7600%.
- •The weighted average accepted rate rose by 0.59 basis point to 4.7394%, up from 4.7335% in the previous auction.
- •The bid-to-cover ratio declined to 1.0848 from 1.5545, reflecting weaker investor demand week-over-week.
- •According to the BSP's June 2026 Monetary Policy Report, open market operations have withdrawn P1.3 trillion in liquidity, with 19.2% absorbed through BSP securities.
- •The central bank streamlined its securities offerings to a single 28-day tenor to rationalize liquidity operations and enhance monetary policy transmission.
The Bangko Sentral ng Pilipinas (BSP) saw the average yield on its short-term securities edge slightly higher on Friday, as investor bids for the instruments declined compared with the previous week's auction.
Tenders for the 28-day BSP bills reached P43.39 billion, surpassing the P40 billion offered on the auction block. However, demand fell short of the P62.179 billion in bids recorded a week earlier for the same offer volume.
The auction produced a bid-to-cover ratio of 1.0848 times, down from the 1.5545 ratio posted in the prior auction.
"The BSP partially awarded P39.5 billion of the tenders, with accepted yields widening to a range of 4.7200% to 4.7600%," the central bank said in a statement.
The accepted yield range for the one-month bills was marginally wider than the 4.72%–4.75% band observed a week earlier. As a result, the weighted average accepted rate rose by 0.59 basis point to 4.7394%, up from 4.7335% previously.
The BSP deploys its securities alongside the term deposit facility to absorb excess liquidity from the financial system and to help steer short-term market yields toward its policy rate. The bills also support improved price discovery for debt instruments and reinforce monetary policy transmission. The weekly bill auctions are closely watched as a real-time gauge of banking system liquidity appetite and short-term money market conditions, with the bid-to-cover ratio serving as a key indicator of demand relative to supply.
The central bank began conducting weekly auctions of short-term securities in 2020, initially offering only the 28-day tenor before introducing the 56-day bill in 2023. It has since streamlined its BSP securities offerings to a single tenor, a move aimed at rationalizing liquidity operations and concentrating on maturities that enhance monetary policy transmission.
According to the central bank's June 2026 Monetary Policy Report, its open market operations have withdrawn P1.3 trillion in liquidity from the financial system. Of this total, 19.2% was absorbed through BSP securities, 52.3% through the overnight reverse repurchase facility, 21.5% via the overnight deposit facility, and 6.9% through the term deposit facility. — Katherine K. Chan