Retail bonds quash appetite for TDFs

Strong reception to the small investor-friendly retail treasury bonds (RTBs) issued by the government continued to spill over to Wednesday’s auction for the Bangko Sentral ng Pilipinas’ term deposit facility (TDF), which saw tempered market demand amid rising rates.

The seven-day TDF was undersubscribed with P21.355 billion tendered for the P30-billion offering.

The BSP sold the one-week TDF at the 2.9 percent to 3.5 percent yield, higher than the 2.9 percent to 3.1 percent range last week.

Bids for the P150 billion in 28-day term deposits also fell short at P149.921 billion, the third consecutive week that the tenor was undersubscribed.

The accepted yield for the one-month facility was within the 3.3-3.5 percent range, up from last week’s 3.25-3.5 percent.

“The undersubscription in the TDF and the relatively higher uptick in auction rates are not a surprise in light of the successful RTB auction, which continued to indicate market appetite for relatively short-dated paper with good value. As the funds generated in the RTB will eventually end up funding projects of the national government, we do not see this take up by the national government as causing undue tightness in liquidity,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.

Last week, the Bureau of the Treasury issued P70 billion in three-year RTBs or more than twice the minimum offer of P30 billion to banks at a coupon rate of 4.25 percent, higher than the 3.5 percent yield for the 10-year RTBs sold in September last year.

National Treasurer Rosalia V. De Leon last week said the Treasury was eyeing to sell at least P100 billion in RTBs until today, April 6, the last day of the offer period.