TDF rates down this week

Published January 12, 2022, 3:47 PM

by Lee C. Chipongian

The central bank’s auction of term deposit facility (TDF) yielded lower average rates this week but still sustaining its strong demand from the market.

The two-tenor TDF has a higher offer of P470 billion compared to the previous week’s P430 billion.

“Both tenors were oversubscribed with bid-to-cover ratios reaching 1.50 and 1.61 respectively for the 7-day and 14-day TDF,” said Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. Total tenders amounted to P735.27 billion, up from P732.23 billion last Jan. 5.

BSP Deputy Governor Francisco G. Dakila Jr.

The 7-day TDF, offered at a higher volume of P200 billion versus P180 billion last week, attracted P299.46 billion. The average rates fell to 1.7232 percent from 1.7371 percent.

The 14-day TDF also have a higher offer this week of P270 billion from P250 billion previously. Tenders amounted to P435.81 billion. The yield also dropped to 1.7487 percent from 1.7760 percent.

Dakila noted that the weighted average interest rates (WAIR) of both tenors continued to decline from last week. “The WAIR for the 7-day TDF settled 1.390 bps (basis points) lower to 1.7232 percent while that for the 14-day TDF fell 2.732 bps to 1.7487 percent,” he said.

“The yields accepted in both tenors shifted lower and widened with the range accepted for the 7-day and 14-day TDF at 1.6875-1.7400 percent and 1.6900-1.7693 percent, respectively,” he added.

Dakila said the TDF auction results “continue to support the view of normalization in liquidity conditions amid ample supply in the financial system.”

The TDF was first introduced in 2016 when the BSP shifted to the interest rate corridor system to bring market rates closer to the BSP policy rate.