TDF rates continue to decline

Published October 16, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Banks bid P114.51 billion of term deposit facility (TDF) offered by the Bangko Sentral ng Pilipinas (BSP) this week, surpassing the P90-billion volume.

MB file photo.
MB file photo.

Average yields across all three tenors took another dive and closer to the BSP’s adjusted policy rate of four percent for the overnight reverse purchase (RRP) facility.

The TDF which is using a variable-rate, multiple-price tender in the weekly auction, has a higher volume this week compared to the previous P80 billion. The tenders were almost unchanged week-on-week.

During Wednesday’s auction, the 7-day TDF which was offered at P30 billion, attracted P39.18 billion worth of tenders, more than October 9’s P38.63 billion.
The average rate dipped to 4.2264 percent from 4.2348 last week.

The 14-day tenor, also offered at P30 billion, received P35.52 billion bids which was smaller than the previous P43.28 billion. Yields dropped to 4.2348 percent from 4.2485 percent.

The 28-day TDF which has a higher offer size of P30 billion this week, had P39.80 billion bids. The average rate declined to 4.2227 percent from 4.2754 percent.

The BSP’s Monetary Board cut interest rates three times this year or 25 basis points (bps) each on May 9, August 8 and September 26 after continuing to assess that inflation will be manageable until 2021.

Inflation as of end-September averaged at 2.8 percent. The BSP has a 2019 inflation forecast of 2.5 percent and 2.9 percent for 2020 and 2021 – all within the government target of two-four percent.