TDF rates rise but bids short of P100-billion offering

Published November 7, 2018, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Term deposit facility (TDF) rates increased anew this week while bids were short of the P100 billion volume.

Bangko Sentral ng Pilipinas (BSP) logo

The Bangko Sentral ng Pilipinas (BSP) raised the volume this week by P30 billion to P100 billion from P70 billion last October 31.

The 14-days and 28-days were undersubscribed, offered at P30 billion and P20 billion, respectively, while the 7-days closed at its offer volume of P50 billion.

The 7-day TDF received tenders of P50.17 billion while its average rate rose to 4.7442 percent from 4.7249 percent last week.

Banks offered P29.56 billion for the 14-days and pulled its rate higher to 4.7890 percent from 4.7631 percent in the previous week.

The 28-days had tenders of P16.17 billion, in the meantime, while yields increased to 4.9010 percent from 4.8798 percent.

Total bids this week amounted to P95.10 billion versus offer of P100 billion.

The weekly TDF auction reflected the increase in BSP’s policy rates in recent weeks. The key BSP rates were raised by a combined 150 basis points since May this year to rein the elevated inflation expectations.

The central bank has an ongoing review to further refine the TDF and its open market operations.

The TDF is primarily one of its main liquidity management tool.

The TDF’s auction size is assessed and determined by liquidity forecasts. Its highest offer volume so far was P180 billion in 2016 and its lowest was P60 billion just last month.

BSP officials said TDF auction was effective in promoting healthy price discovery in the market.