TDF rates lower on all tenors; ₱170 B offered

Published February 12, 2020, 12:00 AM

by manilabulletin_admin


The central bank’s three-tenor term deposit facility (TDF) all had lower yields this week following the Monetary Board’s decision to cut the policy rate by 25 basis points (bps) last Thursday, bringing down the benchmark or the RRP to 3.75 percent.

The Bangko Sentral ng Pilipinas (BSP) offered only P170 billion versus ₱200 billion last February 5. Bids were mixed and totaled ₱170.02 billion with an undersubscribed 7-day TDF.

During Wednesday’s auction, the ₱60-billion 7-day tenor attracted ₱49.66 billion with an average rate of 3.8943 percent which was lower than 4.0301 percent last week. Previously, the tenor was offered at ₱80 billion and oversubscribed at ₱134.77 billion.

The 14-day TDF had the same volume week-on-week of ₱60 billion. Bids amounted to ₱63.54 billion with yields of 3.8772 percent versus 4.0530 percent. Tenders were lower however than last week’s ₱63.54 billion.

The longest-dated TDF, the 28-day, received ₱56.82 billion worth of tenders against offer of ₱50 billion. Last February 5, the volume was higher at ₱60 billion. The average rate fell to 3.9054 percent from 4.0917 percent.

Last February 6, the BSP’s Monetary Board cut the key rate as expected, signalling its intention to continue to trim the BSP rate. BSP Governor Benjamin E. Diokno reiterated that for 2020, the market could expect at least a 50 bps rate cut, lower than the 75 bps adjustment last year.

Diokno said last wee that the manageable inflation environment “allowed room for a preemptive reduction in the policy rate to support market confidence.”

“While recent demand indicators still point to a firm outlook for the domestic economy, the Monetary Board believes that a policy rate cut would provide additional policy support to ward off the potential spillovers associated with increased external headwinds,” said Diokno.