BSP securities to be offered starting September 18

The Bangko Sentral ng Pilipinas (BSP) on Wednesday announced that it will offer securities starting next week, as part of its initiative to shift to more market-based monetary operations.

According to the central bank, the securities will be every Friday, and will be weekly or as necessary depending on the market demand and conditions, as well as liquidity forecasts.

It will have an initial 20 billion to be offered next Friday, September 18, subject to confirmation two days before the actual auction date.

The succeeding auction sizes and frequencies will be determined based on market preference, and liquidity conditions and forecasts.

"BSP Bills and Bonds will be offered via auction. The auction volumes will be small at the outset, to be gradually scaled up depending on market response and consistent with liquidity forecasts," the BSP said.

According to the central bank, the inclusion of securities in the standard monetary operations will provide an additional instrument for managing liquidity in the financial system, and support the implementation of monetary policy under the interest rate corridor (IRC).

"The issuance of BSP Securities is part of the operational enhancements to the IRC framework and does not represent a change in the BSP's monetary policy stance," the BSP clarified.

"Moreover, the issuance of securities by the BSP will add to the existing supply of risk-free financial instruments in the banking system, which in turn could help in the development of the local bond market," it added.

The BSP said that only banks can participate in the auction and secondary market trading at the initial phase, and sell-down to retail and institutional clients is not allowed. Funds from non-resident sources are also not allowed to be placed in the securities.

The BSP in July already signed an agreement with the Bureau of the Treasury (BTr), covering the linkage of the central bank's Monetary Operations System (MOS) and the BTr's National Registry of Scripless Securities (NRoSS). — RSJ, GMA News