TDF auction attracts total bids of P354.79 B

By Lee C. Chipongian

The central bank on Wednesday reopened the 14-day term deposit facility (TDF) auction after 11 weeks of suspension with an initial offer of P20 billion.

Bangko Sentral ng Pilipinas (BSP) logo

The Bangko Sentral ng Pilipinas (BSP) auctioned off two tenors this week — the 7-day and 14-day - for a total volume of P140 billion. Total tenders reached P354.79 billion.

The 7-day, offered at P120 billion, attracted bids worth P284.13 billion. It fetched a lower yield this week of 2.2507 percent compared to June 3’s 2.2510 percent.

The 14-day, in the meantime, received tenders of P70.65 billion with an a average rate of 2.2520 percent.

The 14- and 28-day TDF was last bidded on March 18. Only the 28-day is sidelined until the BSP could trace some market demand for the tenor.

It was only last Tuesday that the BSP decided to resume the 14-day tenor and also increased the volume of the daily reverse repurchase facility (RRP) by P200 billion.

In a statement, the BSP said it will increase the RRP daily volumes at a “measured pace” beginning with P200 billion on June 10.

“Consistent with its practice of assessing current financial system liquidity and market conditions in the conduct of its monetary operations, the BSP will gradually re-offer other tenors in its TDF. Similarly, the daily offer volumes in the RRP facility will be increased at a measured pace,” said the BSP.

The BSP noted the “stabilization of liquidity conditions” of past weeks as evidenced by the “sustained high oversubscriptions in the TDF and RRP auctions” which it said signals that the market is ready for gradual normalization of open market operations.