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BSP looking to auction off other tenors of securities

THE BANGKO SENTRAL ng Pilipinas (BSP) is studying the possibility of offering other tenors of its securities depending on market developments and liquidity conditions.

“The BSP has the flexibility to consider the issuance of longer-dated BSP securities particularly during periods of persistent structural excess liquidity in the system,” BSP Governor Benjamin E. Diokno said in a virtual briefing on Thursday.

Mr. Diokno said specific tenors and offer volumes will continue to be based on the central bank’s assessment of market developments and liquidity conditions.

The central bank in September started offering short-term securities as another tool to mop up excess liquidity in the market and better guide interest rates.

Demand for the 28-day bills reached P1.532 billion since its launch until Dec. 18, which was the last auction date for 2020. This is an oversubscription of its cumulative offerings worth P890 billion in the same period.

“As of Dec. 18, outstanding placements in the BSP securities amounted to P259.7 billion. Said amount accounts for 14.2% of the total amount of system liquidity absorbed by the BSP through its liquidity management facilities,” Mr. Diokno said.

The BSP in October halted offering 28-day term deposits which have the same tenor as its bills.

However, Mr. Diokno said the tenor has not been phased out and “remains very much in the BSP’s monetary toolkit.”

“It will continue to be part of our set of fine-tuning instruments to deal with short-term fluctuations in system liquidity,” he said.

“We will decide on the appropriate configuration of offered tenders for our monetary operations based on industry consultations,” Mr. Diokno said.

Meanwhile, BSP Department of Economic Research Senior Director Zeno Ronald R. Abenoja said they have approached some trust entities to explore how to increase their involvement in the BSP bills.

“We’ll also take into account market appetite for longer securities based on discussions and consultations with counterparts,” Mr. Diokno said. — L.W.T. Noble

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