THE CENTRAL BANK has raised P100 billion as planned from its auction of short-term debt papers on Friday.
The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day debt it offered on Friday as bids reached P152.1 billion, higher than the P135.1 billion in bids seen at last week’s auction.
The bills fetched an average rate of 1.7704%, down marginally from 1.7746% previously. Banks asked for yields ranging from 1.75% to 1.78%, a slightly lower band compare to the 1.7525% to 1.79% margin seen last week.
The central bank uses its short-term bills and term deposit facility to mop up excess liquidity in the system and guide short-term interest rates.
“The results of the BSP bill auction continue to reflect normal market conditions amid sustained ample liquidity in the financial system, BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
“Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” Mr. Dakila said.
Meanwhile, easing inflation expectations and S&P Global Ratings’ move to maintain the Philippines’ current sovereign credit rating may have caused the yield on the BSP bills to drop, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.
Mr. Ricafort said inflation could slow due to the “temporary reduction in pork and rice import tariffs.”
President Rodrigo R. Duterte earlier this month approved the recommendation of his economic managers to temporarily adjust tariffs on imported rice and pork products for a year.
Under Executive Order (EO) No. 135, the President cut the tariff rates for rice to 35% for one year, from from 40% in-quota volume and 50% out-quota volume.
Under EO No. 134, the tariff rates for pork products will be at 10% for three months under the current minimum access volume and 20% outside the quota for the first three months. The tariffs will be at 15% for in-quota and 25% for out-quota pork imports from the fourth to 12th month.
Headline inflation was unchanged at 4.5% in April after the increase in food prices slowed. The central bank aims to keep inflation within 2-4% annually until 2024.
Meanwhile, S&P on Thursday kept its “BBB+” rating on the Philippines and assigned a “stable” outlook on expectations of a “healthy” economic recovery, which will help improve the country’s fiscal standing that has weakened because of the coronavirus crisis.
The current “BBB+” sovereign rating is a notch away from the “A”-level grade targeted by the government, while a “stable” outlook means the rating is likely to be maintained in the next six months to two years.
S&P also maintained its A-2 short-term credit rating for the Philippines, while the outlook on long-term rating is still stable.
The debt watcher last affirmed its credit rating for the country in May 2020 with the same “stable” outlook.
Mr. Ricafort added that developments in the government’s coronavirus disease 2019 (COVID-19) vaccination drive also affected market sentiment.
The government had initially set a target of 70 million vaccinated Filipinos by this year to achieve herd immunity, but due to global supply issues, the goal has since been refocused based on available resources. It now aims to inoculate just 50% to 60% of Filipinos against COVID-19 versus the previous target of 75% to 80%. — IBC