THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded its offer short-term securities on Friday, even as its average rate inched higher due to data showing rising government debt.
The central bank raised P110 billion as planned via its offer of 28-day bills on Friday. Demand for the securities reached P139.55 billion, higher than the P125.35 billion in bids seen a week earlier.
Accepted rates for the short-term bills ranged from 1.705% to 1.9676%, wider than the 1.7025% to 1.825% margin logged a week earlier. This caused the average rate of the debt paper to rise by 4.43 basis points to 1.767% from 1.7227% quoted previously.
The BSP bills and the term deposit facility are tools used by the central bank to mop up excess liquidity in the financial system and guide market rates.
The higher rate fetched for the BSP bills reflect risk-off sentiment after the release of data showing an increase in the national government’s debt, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Preliminary data released by the Bureau of the Treasury on Thursday showed the national government’s outstanding debt inched up 0.28% month on month to P11.64 trillion as of end-August. It also increased by 21% from a year earlier.
The government incurred debt worth P1.85 trillion over the first eight months of 2021, 18.9% higher year on year.
Mr. Ricafort said the peso’s weakness also affected yield movement.
The peso closed at P51 per dollar on Monday, Tuesday, and Thursday, its weakest showing in more than a year or since its P51.07 finish on March 26, 2020.
The local unit is down by P2.973 or 6.2% against its close of P48.023 per dollar on Dec. 29, 2020. — L.W.T. Noble