The central bank’s auction of term deposit facility (TDF) yielded mixed results for the two tenors while volume was reduced by P20 billion to P510 billion this week.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said there is still “sustained overall demand for TDF” with bids reaching P532.24 billion versus P530.61 billion in the previous Wednesday, Sept. 29.
“The results of the TDF auction continue to reflect stable market conditions, supported by sustained ample liquidity in the financial system,” said Dakila.
The 7-day TDF was offered lower this week at P150 billion compared to P170 billion previously. Tenders amounted to P195.38 billion, up from last week’s P160.05 billion. The bid coverage ratio increased to 1.3025 from 0.9415. The average interest rate was lower at 1.7259 percent from 1.7371 percent.
The BSP retained the P360 billion 14-day volume this week. However, the longer-dated tenor was undersubscribed with P336.86 billion compared to the previous week’s P380.56 billion. The bid coverage ratio fell to 0.9357 from 1.0571. The average interest rate increased to 1.7885 percent from 1.7443 percent.
“The 7-day TDF was oversubscribed, receiving bids 1.30x the offering,” said Dakila. The 14-day TDF was undersubscribed by 0.94x against the offer volume.
“Nevertheless, total tenders reached P532.24 billion, in line with the BSP’s expected range,” said Dakila.
In the meantime, he also noted that the yield for the 14-day TDF continued to increase, rising by 4.414 basis points (bps) to 1.7885 percent. “The yields accepted in both tenors shifted slightly higher but narrowed to a range of 1.6900-1.8750 percent in the 7-day TDF and widened to a range of 1.7150-2.1000 percent in the 14-day TDF,” he said.
The TDF is one of BSP’s primary liquidity-mopping facility. The TDF has absorbed about 43 percent of the combined outstanding amount of liquidity siphoned off by the BSP in the second quarter.
The TDF helps the BSP manage inflation path which is still elevated and above-target of two-four percent.