BSP plans debt paper issue in Q2

MANILA, Philippines-- The Bangko Sentral ng Pilipinas (BSP) will issue its own debt papers in the second quarter as part of the central bank’s effort to further strengthen the transmission of the policy rate movements to the rest of the economy.

BSP Governor Benjamin Diokno said the planned fund raising activity is set for soft launching in the first quarter.

“This year, we’ll enter a new monetary policy regime. In response to our newly amended charter, the BSP is set to issue tradable securities or bonds in the second quarter of 2020,” Diokno said.

BSP Deputy Governor Francisco Dakila Jr. earlier said the issuance of the securities would continue to be within the interest rate corridor (IRC) framework.

“So it will be one of the instruments that will be within that framework. We need to take a look at the whole, how much liquidity do you want to siphon off from the economy and from then on decide which instrument will take what portion of that adjustment,” Dakila said.

The BSP adopted the framework to guide short-term market rates toward the central bank’s policy rates. It is intended to help ensure that money market rates move within a reasonable close range around the BSP’s policy rate.

According to Dakila, the planned securities issuance would give the central bank additional instruments on top of the term deposit auction facility (TDF) with tenors of seven, 14, and 28 days.

The proposed tradeable securities will have an advantage over term deposits in terms of pricing.

There will be regularity in terms of the issuance of the proposed securities just like the term deposits wherein there is a quarterly calendar and the volume would be announced in a short period of time before the scheduled auction.