The central bank’s term deposit facility (TDF) on Wednesday, March 16, received P446.48 billion tenders against an offer of P380 billion while yields continued to increase.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said oversubscription in the BSP deposit facilities reflected the normalization of market conditions following the issuance of Retail Treasury Bonds.
However, TDF rates have remained low, said Dakila, and this was “supported by ample liquidity in the financial system.”
The TDF’s offered volume this week of P380 billion was lower compared to P410 last March 9.
“Both tenors were oversubscribed with the bid-to-cover ratio in the 7-day TDF at 1.24x the offered amount and that for the 14-day TDF at 1.13x the offering,” noted Dakila.
At Wednesday’s auction, the 7-day TDF was offered at P150 billion from P160 billion last week. The tenor attracted P185.75 billion bids which was higher than P161.40 billion previously. The average interest rate increased to 1.9603 percent from 1.9525 percent while the bid coverage ratio rose to 1.2384.
The 14-day TDF, offered lower at P230 billion from P250 billion last week, received P260.73 billion bids from P255.75 billion last March 9. The average interest rate rose to 2.0905 percent from 2.0651 percent while the bid coverage ratio also improved to 1.1336.
“Compared to last week’s rates, the weighted average interest rates for both tenors continued to rise although at a slower pace,” said Dakila. The yields accepted in both tenors shifted higher but narrowed to a range of 1.7000 percent to 2.1000 percent in the 7-day TDF, and 1.8000 percent to 2.2100 percent in the 14-day TDF.
The BSP introduced the TDF in 2016 after it shifted to the interest rate corridor system to bring market rates closer to the policy rate. It is one of the central bank’s primary liquidity mopping-up tool to control inflation.