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BSP to soft launch debt papers in Q1


The Bangko Sentral ng Pilipinas (BSP) is looking for a soft launch of its maiden debt paper offering in the first quarter of the year, its chief said.

“We will have a soft launching by first quarter and we will launch it formally in the second quarter this year,” BSP Governor Benjamin Diokno told reporters during the first GBED Talks press chat held late last week.

The central bank’s authority to issue negotiable certificates of indebtedness even during normal times was restored by Republic Act (RA) 11211.

Signed into law in February this year, RA 11211 amended RA 7653 or the “New Central Bank Act of 1993.”

Prior to the amendment, Bangko Sentral debt offerings were only allowed during cases of extraordinary price movements.

“For the first quarter, we will conduct a market sounding exercise so we will be discussing with counterparties the features of the new securities and just to get an idea on their preferences,” BSP Department of Economic Research Director Dennis Lapid, meanwhile, said.

Earlier, Diokno noted that the tenor for the central bank debt papers will be short-termed.

“Shorter than T-bills. Probably 60 days, but we can actually think of the other tenors,” he said.

Based on the amended central bank charter, “the Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies.”

Former BSP Deputy Governor Diwa Gunigundo has said central bank offerings will not compete with the national government’s debt issuance.

“Far from it. We know, we recognize, that the issuance of the central bank bills or bonds should not compete with the treasury,” he stressed. “So even in case there is a need, let’s say, to issue long-dated securities, it should be one-off.”


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