Market makes beeline for BSP’s fresh term deposit offering

The Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) auction, aimed at mopping up excess liquidity, reverted to oversubscription on Wednesday after bids last week fell below the total offer.

Tenders for the P30 billion in seven-day term deposits reached P43.568 billion. The accepted yield for the one-week tenor ranged between 2.5-3.1 percent.

For the 28-day facility, banks and trust institutions tendered P162.463 billion, exceeding the P150-billion offering. The yield for the one-month term deposits was within the range of 2.85-3.275 percent.

Last week, bids for the six-day term deposits amounted to only P15.8 billion or just a little over half of the volume offered.

The 27-day facility was also undersubscribed last week, attracting P113.2 billion in tenders.

BSP Governor Amando M. Tetangco Jr. had attributed last week’s undersubscription to “seasonality (banks holding on to cash for the holidays) and the withdrawal of trust accounts from BSP facilities.”

“Because it’s Christmas season, banks would want to have a sufficient liquidity buffer so that in case there is a sudden demand from their clients, they can immediately respond to that,” Tetangco had explained to reporters.

For the TDF auctions on Dec. 14 and 21, the BSP will again offer a total of P180 billion.

“We saw realignment by banks and trust departments, given the results of the T-bond auction yesterday (where there was rejection of tenders). Trusts have already hit the required 50-percent winding down of their placements in TDF and overnight deposit facility by December, so the maturing funds from seven days and 28 days previously deposited were rolled over,” Tetangco said.

“Our view remains that there is sufficient liquidity in the system. Nevertheless, we will continue to monitor bank requirements over the holidays,” Tetangco added.