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BSP sells P100 billion in 28-day debt

The Philippine central bank raised P100 billion through short-term securities it auctioned off on Friday, as rates dropped after the government finished its dollar bond sale. 

The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day bills it offered from total bids worth P158.2 billion, making the offer nearly two times oversubscribed. 

The demand was 17% higher than P135.74 billion in total tenders last week. 

The short-term debt fetched an average rate of 1.812% from 1.816% at the previous auction. 

Investors sought rates from 1.78% and 1.824%, lower than last week’s 1.8-1.835%. 

The rates corrected on Friday after rising for four straight weeks, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a Viber message. 

He said players had factored in the recent offshore bond issuance by the government, where it sold $3 billion via its dual-tranche offering of dollar-denominated bonds. 

This meant there is less pressure for the government to raise more funds locally for the meantime to finance the budget deficit, he added. 

The Philippines sold $2.25 billion via 25-year dollar bonds on Tuesday and $750 million in 10.5-year notes. 

This marked the country’s third offshore bond offering this year, after the $2.5 billion worth of euro-denominated notes it sold in April and $500 million yen-denominated Samurai bonds issued in March. 

The government is planning to raise $7 billion from the international debt market this year to help fund its budget deficit that is expected to widen to 9.3% of economic output. 

Mr. Ricafort said the higher demand showed there is excess liquidity in the financial system. — Beatrice M. Laforga 

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