The central bank’s term deposit facility (TDF) on Friday, Nov. 3, attracted P343.6 billion in tenders against offer of P310 billion.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the bids received this week was “slightly higher than the BSP’s expected volume range.”
He noted that “strong demand (was) observed in the BSP term deposit facility.”
Due to the three-day non-working days this week, the TDF auction held on Wednesdays were transacted on Friday instead.
Dakila said the BSP reduced the total volume offering in the TDF to P310 billion, with the allocations for the 5-day and 12-day tenors lowered to P190 billion from P220 billion, and P120 billion from P160 billion, respectively.
With tenders of P343.6 billion, this week’s bid-to-cover ratios for the 5-day stood at 1.061x and 1.183x for the 12-day tenor. The bid coverage rations “further indicating strong demand for the term deposits,” said Dakila.
Of the total bids received, Dakila said the BSP accepted P310 billion.
Meanwhile, the weighted average interest rates (WAIR) for the 5-day and 12-day tenors increased from the previous week.
The average rate for the 5-day TDF went up by 14.3 basis points (bps) to 6.5740 percent, while 12-day WAIR went up by 14.1 bps to 6.5902 percent.
“The range of yields accepted in the 5-day and 12-day tenors widened to 6.4390-6.7273 percent and 6.4000-6.6700 percent, respectively,” said Dakila.
The BSP’s TDF is an interest rate corridor facility to bring the market rates closer to the BSP key rate. Basically, the TDF absorbs excess money in the financial system to control inflationary pressures.
The TDF was first introduced in 2016 as one of BSP’s main liquidity management tool.