BSP’s TDF attracts P390.94 B bids

Published August 3, 2022, 5:19 PM

by Lee C. Chipongian

The central bank’s term deposit facility (TDF) was oversubscribed on Wednesday, Aug. 3, with P390.94 billion bids.

The total tenders surpassed the offered volume of P330 billion, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr.

“There was good demand for both tenors with bid-to-cover ratios at 1.228x and 1.075x the respective offer volumes in the 7-day and 14-day tenors. Total tenders amounted to P390.94 billion, higher than the BSP’s expected volume range,” said Dakila.

The BSP’s auction offer of P330 billion was higher than July 27’s P310 billion.

The 7-day tenor was offered at P170 billion from P150 billion last week, while the 14-day TDF’s was unchanged at P160 billion.

The 7-day tenor had bids of P218.96 billion, up from last week’s P149.47 billion. The longer-dated tenor attracted P171.98 billion versus P97.89 billion on July 27.

Dakila noted that the weighted average interest rates (WAIR) for both tenors continued to increase.

Yield on the 7-day tenor rose by 12.5032 basis points (bps) to 3.5089 percent while 14-day tenor also increased by 8.2243 bps to 3.5723 percent.

The yields accepted likewise shifted higher but narrowed to a range of 3.2500- 3.6500 percent in the 7-day TDF and 3.4000-3.7250 percent in the 14-day TDF, said Dakila.

“The results of the TDF auction reflect current market conditions with preference for shorter tenors as market participants wait for key data updates such as inflation and GDP,” said Dakila.

The BSP first implemented the TDF in 2016 when it adopted the interest rate corridor system or IRC. The IRC improved its liquidity management tools in controlling inflation and to bring market rates closer to the BSP policy rate.

The BSP has raised its key rate by 125 bps so far since May 19, bringing the key rate from two percent to 3.25 percent by July 14.