BSP gets higher TDF bids this week

Published June 16, 2021, 5:04 PM

by Lee C. Chipongian

The central bank received higher tenders for the two-tenor term deposit facility (TDF) this week while yields were mixed.

The overall bids reached P655.83 billion against offer of P530 billion. Both numbers are higher than last week’s P599.12 billion tenders versus offer of P520 billion.

“Both tenors were oversubscribed with the 7-day and 14-day TDF receiving bids 1.52x and 1.14x higher than their respective volume offers,” noted Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr.

The 7-day TDF, offered lower at P140 billion from P150 billion last June 9, attracted P212.28 billion which was more than P140.16 billion tenders last week. With more demand from banks, the bid coverage ratio increased to 1.5163 from 0.9344.

The shorter-dated TDF’s average rate dipped to 1.7464 percent from 1.7582 percent or a lower weighted average interest rate (WAIR) of 1.173 basis points (bps).

The 14-day TDF is the opposite since the BSP increased its volume this week to P390 billion from P370 billion previously. Its tenders reached P443.55 billion but it was lower compared to June 9’s bids of P458.96 billion. This resulted to a lower bid coverage ratio of 1.1373 from 1.2404.

The two-week tenor closed with a higher average rate of 1.8118 percent from 1.7950 percent previously. The 14-day WAIR was up by 1.688 bps.

“The yields accepted in the 7-day tenor remained low and narrowed to a range of 1.700-1.800 percent while that for the 14-day tenor shifted higher but narrowed to a range of 1.713-1.850 percent,” said Dakila.

For this week’s TDF auction, Dakila said the “results of the auction continue to mirror market participants’ search for yield in the longer tenor as the financial system remains very liquid.”

The TDF is one of BSP’s liquidity absorption tool. It complements its securities facility which also withdraws a large part of structural liquidity surplus to bring market rates closer to the policy rate.