BSP to Start Issuing Debt Securities Next Week

The BSP’s authority to issue its own debt paper was restored through legislation passed last year. The first auction of BSP securities will take place on 18 September.

The BSP (Bangko Sentral ng Pilipinas) has announced it will start issuing its own securities on 18 September, as part of a shift to more market-based monetary operations.

“The inclusion of BSP Securities issuance in the standard monetary operations of the BSP provides an additional instrument for managing liquidity in the financial system and support the implementation of monetary policy under the Interest Rate Corridor (IRC) framework,” the BSP said.

The issuance of securities by the central bank will add to its existing supply of risk-free financial instruments in the banking system, which it says could help in the development of the local bond market.

BSP bills and bonds will be offered via auction in small volumes at the outset, Auction volumes will be gradually scaled up depending on the market’s response and liquidity forecasts.

For the initial offering, the BSP said it will auction 28-day BSP Bills with an indicative offer volume of about PHP 20 billion (USD 412 million).

The BSP’s authority to issue its own debt paper was restored through the passage of the New Central Bank Act last year. Previously, it was only allowed to issue its own debt securities in response to extraordinary movements in price levels.

In July, the central bank signed an agreement with the BTr (Bureau of the Treasury) to link its monetary operations system with the national electronic registry system for government securities, paving the way for the issuance of central bank securities.