BSP’s 28-day term deposit offering undersubscribed

The 28-day term deposits offered by the Bangko Sentral ng Pilipinas yesterday was undersubscribed for the eighth straight week while banks continued to gravitate toward the shorter tenor.

Bids for the P140-billion 28-day term deposit facility (TDF) reached only P74.409 billion, or a little over half of the offering. The BSP accepted all tenders.

The accepted yield for the one-month facility was within the range of 3.35-3.5 percent, down from 3.375-3.5 percent last week.

For the seven-day TDF, P70.809 billion was tendered for the P40-billion offering.

The BSP awarded all the one-week term deposits at a yield of between 3.2 and 3.3 percent, also lower than last week’s 3.2-3.35 percent.

Even as the BSP still offers a total of P180 billion in TDF weekly, it since last week raised the volume for the seven-day facility from P30 billion previously while cutting that for the 28-day from P150 billion.

Last week, BSP Governor Amando M. Tetangco Jr. told reporters in a text message that “there continues to be strong demand for the seven-day tenor over the 28-day tenor as banks find the relatively high rate for the seven-day attractive.”

“We expect to see continued interest in the seven-day as [its] average rate remains close to the 28-day average rate. The subscription for the 28-day may rise as funds come back to the banking system,” according to Tetangco.

Launched in June last year, the weekly TDF auctions form part of the implementation of the BSP’s interest rate corridor, aimed at bringing market rates closer to the policy rate of 3 percent.

The TDF auctions mop up excess liquidity.