Strong demand, stable rates for BSP TDF continue

Published September 22, 2021, 6:08 PM

by Lee C. Chipongian

BSP Deputy Governor Francisco G. Dakila Jr.

The central bank’s auction of term deposit facility (TDF) fetched stable rates ahead of the Monetary Board’s policy meeting on Thursday, September 23.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the weighted average interest rate for the 7-day TDF continue to drop to 1.7046 percent or 0.377 basis point (bp) lower week-on-week, while the 14-day TDF’s yield rose by 0.164 bp to 1.7439 percent.

Dakila said the yields accepted in the 7-day tenor “remained low and narrowed” at 1.6900 percent to 1.7125 percent while the 14-day tenor shifted slightly higher but continued to narrow to a range of 1.7100 percent to 1.8000 percent.

“The results of the TDF auction remain in line with stable market conditions, supported by sustained ample liquidity in the financial system,” said Dakila.

On Wednesday, the 7-day TDF was offered higher at P160 billion from P150 billion last week. It attracted P217.42 billion bids versus P216.55 billion previously. The bid coverage ratio fell to 1.3589 from 1.4437. The yield was down slightly to 1.7046 percent from 1.7083 percent.

The 14-day TDF was offered at the same amount of P360 billion this week. It received P402.80 billion tenders compared to P391.11 billion last September 15. The bid coverage ratio rose to 1.1189 from 1.0864. The yield was up at 1.7439 percent from 1.7423 percent.

“The auction was oversubscribed with bids received in the 7-day and 14-day TDF at 1.36x and 1.12x their respective offer volumes,” said Dakila. Tenders reached P620.23 billion which he noted was “well within the BSP’s expected volume range.” Last week, total bids reached P607.66 billion.

The TDF was first introduced in 2016 with the BSP’s shift to an interest rate corridor framework. It used to have a 28-day tenor but this has since been transferred to the BSP securities facility which is auctioned every Friday.