TDF results mixed this week


By Lee C. Chipongian

The central bank offered more auction volume for its term deposit facility (TDF) this week of P80 billion from P50 billion last week. The offer was oversubscribed for all three tenors with total bids at P96.43 billion.

Bangko Sentral ng Pilipinas (BSP) logo

The auction for the 7-day tenor offered at P20 billion, had P32.59 billion bids Wednesday. Last week the offer was only P10 billion. The average rate fell to 4.3323 percent from 4.3486 percent last September 11.

The 14-day TDF with P30 billion offer, which was also higher than last week’s P20 billion, attracted tenders worth P31.31 billion. Yields increased to 4.4139 percent from 4.3995 percent.

The 28-day tenor was offered at P30 billion versus P20 billion previously. Bids totaled P32.52 billion while average rate dropped to 4.4578 percent from 4.4907 percent last week.

The next Monetary Board policy meeting is on September 26. Before the Saudi Aramco terrorist bombing, which impacted on the global oil supply, the market was expecting the BSP to cut interest rates by another 25 basis points (bps) at least.

BSP Governor Benjamin E. Diokno has previously communicated to the market their intention to reduce policy rate by 25 bps and also banks’ reserve requirement ratio (RRR) in the last months of 2019. The RRR was already reduced by 200 bps end-July.

The September inflation turnout will be a main factor whether or not the BSP will cut rates anew. The BSP officials had earlier predicted that the average inflation will come below two percent for the third quarter.
At its last policy meeting, the BSP had a 2019 inflation forecast of 2.6 percent and 2.9 percent for 2020 and 2021.