TDF rates up ahead of MB policy meeting

By Lee C. Chipongian

The central bank’s term deposit facility (TDF) attracted higher bids this week while yields were mixed ahead of today’s (Thursday) Monetary Board policy meeting, the first for 2019.

Total bids amounted to P51.19 billion against offer of P50 billion. This was more than last January 30’s volume of P42.80 billion.

Unlike last week where all tenors ended up, Wednesday’s yields were mixed with higher 7-days and 28-days’ average rates but down for the 14-days.

The 7-day TDF’s rate rose to 5.1411 percent from 5.0654 percent last week, with tenders amounting to P22.59 billion versus offer of P20 billion. This was twice the bids submitted last week of only P11.57 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The 14-day average rate however fell to 5.1765 percent from 5.1770 percent.
Bids for the mid-tenor was off the P20 billion offer at only P16.90 billion, also lower compared to the previous week’s P18.88 billion tenders.

For the longer-dated tenor, yields went up to 5.1788 percent from 5.1779 percent. With a P10-billion volume, the 28-day TDF had P11.70 bids versus last week’s P12.42 billion.

The TDF market has been in the P50-billion volume for some weeks since the BSP is comfortable with this auction liquidity after deciding last December 13 to pause on its rate increases. Policy rates have gone up by 175 basis points from May to November 2018.

The BSP has signalled a probable no-change policy action for this week and for some time, at least until they could see a “low and stable” figure. According to BSP Deputy Governor Diwa C. Guinigundo, the inflation rate would be firmly in the mid-point level of the two-four percent target by