Preference for short-term TDF remains
MANILA — Banks snapped the seven-day term deposits offered by the Bangko Sentral ng Pilipinas Wednesday while the 28-day facility was under-subscribed for the 10th consecutive week.
The seven-day term deposit facility (TDF) was oversubscribed as P68.564 billion were tendered for the P40-billion offering.
The BSP accepted the seven-day tenor at a yield of between 3 percent and 3.23 percent, up from last week’s 2.6-3.275 percent.
Meanwhile, bids for the P140-billion 28-day TDF amounted to only P111.128 billion, with the BSP accepting all tenders.
The yield for the 28-day facility was within the range of 3.35-3.5 percent, down from 3.375-3.5 percent last week.
“There continues to be sufficient liquidity in the system, particularly for the seven-day tenor which was oversubscribed again. So there continues to be strong interest in the short end of the curve,” BSP Governor Amando M. Tetangco Jr. told reporters on the sidelines of the special testimonial luncheon held in his honor, which was hosted by seven local and foreign business groups.
“On the 28-day, the interest rate was basically flat relative to last week and it was also undersubscribed again. Factors behind this would be the unwinding by the trust departments of their placements in the TDF, increased lending by the banks to their corporate clients, and also there were private issues prior to this auction so some of the funds went to those issues as well,” Tetangco said.
“If we look at the overall situation, we judged that there’s adequate liquidity in the system at this point. We will continue to monitor this and see if there will be a need to adjust at some point. But right now, the auction amounts are still appropriate,” according to Tetangco.
The BSP will also offer a total of P180 billion in TDF next Wednesday, even as it raised, early this month, the volume for the seven-day facility from P30 billion previously while lowering that for the 28-day from P150 billion.
Launched in June last year, the weekly TDF auctions form part of the BSP’s implementation of the IRC to bring market rates closer to the policy rate of 3 percent by mopping up excess liquidity. SFM
