MANILA – The Bangko Sentral ng Pilipinas (BSP) will reissue its own debt instrument starting next week as it works towards a more market-based monetary operations after this authority was restored under the New Central Bank Act.
In a statement Wednesday, the central bank said it will auction off BSP Bills on September 18 with an indicative offer volume of PHP20 billion.
It said the amount will be “gradually scaled up depending on market response and consistent with liquidity forecasts.”
The debt paper will be used as part of the central bank’s liquidity management tools and reinforces monetary policy implementation under the Interest Rate Corridor (IRC), which the BSP adopted in June 2016.
It is also an additional option among the risk-free financial instruments in the domestic banking system and is seen to boost the local bond market.
Officials of the BSP and the Bureau of the Treasury (BTr) have inked a memorandum of agreement (MOA) for the linkage of the central bank’s web-based electronic platform, Monetary Operations System (MOS), and BTr’s electronic registry system for government securities, the National Registry of Scripless Securities (NRoSS).
Officials from both agencies said issuance of BSP debt papers will not, in any way, compete with the government’s regular auction of treasury bills (T-bills) and treasury bonds (T-bond).
“In particular, the issuance of BSP securities is expected to facilitate the construction of (a) benchmark yield curve at the short end, which the market can refer to when pricing loans to clients and debt instruments,” BSP Governor Benjamin Diokno said earlier.
In a Viber message to journalists Thursday, National Treasurer Rosalia de Leon said BTr is in close coordination with the BSP regarding its debt paper issuance.
She does not expect any liquidity squeeze issues because of the BSP bills and bond issuance, citing there remains oversubscription on the central bank’s term deposit facility (TDF) auctions.
“We closely coordinate with BSP on our respective issuance including segments of curve. No crowding out effect,” she added. (PNA)
