TDF bids, yields decline

Published April 14, 2021, 4:30 PM

by Lee C. Chipongian

The central bank’s term deposit facility (TDF) attracted lower bids this week but still oversubscribed at P634.78 billion versus offer of P490 billion.

TDF yields continued to decrease, based on Bangko Sentral ng Pilipinas (BSP) auction results.

The 7-day TDF, offered at P140 billion, received P181.41 billion tenders, lower compared to April 7’s P191.73 billion. The average rate fell to 1.7737 percent from 1.7842 percent last week.

The 14-day tenor, in the meantime, had P453.36 billion bids against offer of P350 billion. This was lower than the previous P459.38 billion tenders. The average rate also decreased to 1.8097 percent from 1.8431 percent previously.

BSP Deputy Governor Francisco G. Dakila Jr. noted continued strong demand for the TDF auction with P634.78 billion bids. This was however lower than last week’s P651.11 billion.

The BSP, he said, maintained its TDF offer volume at P490 billion with the same allocation this week from April 7. “Both tenors were oversubscribed, each receiving tenders of about 1.30x their offered volumes,” he said. The total tenders was “within the BSP’s range of expectations for liquidity,” he added.

The TDF yields were still on the downtrend while the accepted rates remained low and narrow, said Dakila. For the 7-day tenor, this ranged between 1.700 percent and 1.800 percent while 14-day tenor “shifted higher but narrower” with a range of 1.780 percent to 1.830 percent.

The weighted average interest rates for both tenors continued to decrease. The 7-day TDF declined by 1.050 basis points (bps) while the 14-day dropped by 3.341 bps.

Dakila said the TDF auction is normalizing on the back of market participants’ sentiment on liquidity conditions which remains in healthy supply.