TDF tenders hit P678 B amid strong demand

The central bank’s auction of term deposit facility (TDF) attracted P677.99 billion tenders on Wednesday against offer of P480 billion, while yields have mixed results.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. continues to observe “ample” financial system liquidity which is being channeled to the TDF. Its volume which has been rising since September 16 by P40 billion a week was increased by P50 billion for the October 7 auction.

 “The BSP increased the TDF offer volume to P480 billion in (Wednesday’s) auction (from P430 billion). All tenors were oversubscribed with tenders for the 7-day, 14-day and 28-day TDF reaching 1.17x, 1.53x and 1.80x the respective offer volumes,” said Dakila.

He also noted that the average interest rates for the 7-day, 14-day and 28-day tenors increased by 0.538 basis point (bp), 0.064 bp and 0.188 bp. “The range of accepted yields were narrower than the previous week, as follows: 1.825-1.860 percent for the 7-day TDF; 1.822-1.860 percent for the 14-day TDF; and 1.830-1.850 percent for the 28-day TDF,” he added.

The 7-day tenor was offered at P200 billion this week from P180 billion last September 30. It attracted P233.94 billion tenders which was lower compared to the previous week’s P251.53 billion. It fetched a lower yield of 1.8431 percent from 1.8377 percent.

The 14-day TDF with a higher offer of P220 billion from P200 billion, was also oversubscribed with P336.33 billion, more than last week’s P297.14 billion. Its average rate rose to 1.8492 percent from 1.8485 percent.

As for the 28-day tenor, banks’ appetite for the longest-dated TDF continue to be unaffected by its twin 28-day maturing BSP Bills.

During Wednesday’s auction, the BSP added P10 billion in its  28-day offering to P60 billion and it received P107.71 billion tenders. This was higher than the previous week’s P96.51 billion. Its yield went up to 1.8445 percent from 1.8426 percent last week.

BSP Governor Benjamin E. Diokno has said that liquidity infused by the BSP to the financial system has reached P1.5 trillion so far, and this was 7.6 percent of gross domestic product.

 “BSP has injected hefty liquidity into the financial system to soften the impact of the COVID-19 crisis on the economy,” he said in an online conference on Monday.

“This liquidity injection will be aided in part by the BSP’s newest liquidity management tool of the BSP—securities issuance. With it, we will be able to further improve our ability to manage liquidity in the system, consistent with our price stability mandate,” he said.

The BSP securities are auctioned off every Friday and only 28-day BSP Bills are being offered since the market has a preference for short term maturities at this time.