Bangko Sentral’s TDF auction oversubscribed

The Bangko Sentral ng Pilipinas’ term deposit facility (TDF) auction Wednesday, the last for this quarter, was again oversubscribed as bids were more than double the P90-billion offering.

Banks and trust institutions tendered a total of P206 billion—P172 billion for the P80 billion in 28-day term deposits and P34 billion for the P10-billion seven-day facility.

The yield remained at 2.5 percent for the seven-day term while the BSP accepted 2.5-2.5625 percent for the 28-day.

To kick off the fourth quarter, the BSP on Oct. 5 will offer P110 billion in term deposits—P100 billion in 28-day and P10 billion in seven-day. The volume of term deposits to be auctioned on Oct. 12 will also be P110 billion, the BSP said in the latest advisory on its website.

BSP Governor Amando M. Tetangco Jr. had said that they have been seeing gains in mopping up excess liquidity in the system through the weekly TDF auctions as part of the implementation of the interest rate corridor (IRC).

According to BSP Deputy Governor Diwa C. Guinigundo, they expected three more months before interest rates move more decisively toward the policy rate.

Operational adjustments had been implemented by the BSP ahead of the implementation of the IRC.

The overnight lending facility—the upper bound of the corridor—was cut to 3.5 percent from the former repurchase (RP) facility of 6 percent, while the policy rate or reverse repurchase (RRP) facility had been converted into overnight, with its rate cut to 3 percent from the previous RRP facility of 4 percent.

The BSP kept the overnight deposit facility or the former special deposit accounts (SDA) rate of 2.5 percent, which serves as the lower bound of the corridor. Ben O. de Vera