TDF still oversubscribed; yields are mixed

Published August 26, 2020, 5:06 PM

by Lee C. Chipongian

The central bank’s term deposit facility (TDF) were oversubscribed on Wednesday with a higher volume but yields continue to end mixed.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the demand for the TDF “remains strong”.

“Results of (the August 26) auction continue to show ample liquidity in the financial system. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of market developments and liquidity conditions,” said Dakila.

The TDF has a higher offer of P270 billion versus P230 billion last week. The bids amounted to P391.67 billion.

The 7-day tenor with more offer of P110 billion from P90 billion previously, attracted P145.84 billion tenders from P135.31 billion. The average rate was at 1.7834 percent from 1.7708 percent.

The 14-day TDF, also offered at P110 billion from P90 billion last week, received P163.54 billion bids compared to P157.75 billion on August 19. The average rate was also lower at 1.8317 percent from 1.8347 percent.

The longer dated 28-day had tenders amounting to P82.29 billion, higher than last week’s P79.17 billion. The offer was unchanged at P50 billion. Yields were up at 1.8481 percent from 1.8232 percent.

“All three tenors were oversubscribed with the 7-day, 14-day and 28-day TDF receiving 1.33x, 1.49x and 1.65x their offered volumes, respectively. Total tenders received amounted to P391.67 billion,” said Dakila.

The average interest rates for the 7-day and 28-day tenors increased by 1.26 basis points (bps) and 2.49 bps to 1.783 percent and 1.848 percent, respectively, while the average interest rate for the 14-day TDF decreased marginally by 0.31 bp to 1.832 percent, noted Dakila. “(The) range of accepted yields remained low and narrow as follows: 1.750-1.880 percent for the 7-day; 1.760-1.950 percent for the 14-day; and 1.766-1.952 percent for the 28-day,” he added.