The central bank’s term deposit facility (TDF) was oversubscribed but yields fell as demand for the two tenors were mixed on Wednesday.
The Bangko Sentral ng Pilipinas (BSP) maintained the offer volume at P550 billion this week. It received P677 billion tenders which was a little more than P673.54 billion on August 11.
BSP Deputy Governor Francisco G. Dakila Jr. noted that there was oversubscription in both tenors. The 7-day TDF was 1.67x oversubscribed while the 14-day TDF was 1.07x more than offer.
Dakila also said that the weighted average interest rate (WAIR) for both tenors declined, with the 7-day yield down by 2.634 basis points and the 14-day was also down by 1.150 bps.
“The bulk of the yields accepted in the auction shifted lower and narrowed further to a range of 1.6750-1.7388 percent in the 7-day tenor and 1.7000-1.7450 percent in the 14-day tenor,” he said.
The 7-day tenor, with P150 billion offer, received P249.89 billion bids. This was higher than last week’s P200.54 billion. Its average rate fell to 1.7113 percent while the bid coverage ratio increased to 1.6659.
The 14-day TDF was also offered with the same volume as August 11 of P400 billion. Bids amounted to P427.11 billion, it is lower compared to last week’s P473 billion. The average rate dropped to 1.7274 percent while the bid coverage ratio decreased to 1.0678.
Dakila said the “results of the auction continue to support the view that market conditions remain normal due primarily to sustained ample liquidity in the financial system.”
The TDF is BSP’s main liquidity management tool at the moment. The BSP securities facility, which only has one tenor, has a lower volume compared to the TDF.