TDF rates up this week


By Lee C. Chipongiam

Yields of the central bank’s term deposit facility (TDF) went up this week while bids were mixed.

Bangko Sentral ng Pilipinas (BSP) logo

Based on Bangko Sentral ng Pilipinas (BSP) data, total tenders amounted to P76.75 billion. Offer size was smaller this week at P80 billion compared to the previous week’s P100 billion.

The 7-day TDF, offered at a smaller size of P20 billion from August 22’s P40 billion, attracted tenders of P19.23 billion. The average rate of 4.4852 percent was higher than 4.4597 percent last week.

The 14-day tenor, also at P20 billion, was oversubscribed at P24.32 billion. The offer size was also reduced by P10 billion compared to P30 billion last week. The average rate increased to 4.5055 percent from 4.4938 percent.

The 28-day TDF has a higher volume this week of P40 billion from P30 billion. The bids amounted to P33.20 billion only. Yields rose to 4.4832 percent from 4.4613 percent.

The TDF is one of the central bank’s main liquidity absorption facility. It was first implemented in June 2016 as part of the interest rate corridor framework.

The IRC brings market rates closer to the BSP policy rate.

The Monetary Board cut benchmark overnight rate by 25 basis points (bps) last August 8, with a still benign inflation outlook which the BSP forecast at 2.6 percent for 2019. The BSP has reduced the interest rates by 50 bps.

BSP Governor Benjamin E. Diokno said on Tuesday that there will be another 25 bps cut before the year ends.