Preference for 7-day TDF sustained amid external risks

Demand for the Bangko Sentral ng Pilipinas’ seven-day term deposit facility (TDF) continued to be robust amid external risks even as the 28-day tenor offered Wednesday was undersubscribed for the 12th straight week.

The seven-day TDF was oversubscribed as P53.571 billion were tendered for the P40-billion offering.

The BSP accepted the seven-day facility at a yield of between 2.9 percent and 3.15 percent.

On the other hand, bids for the P140-billion 28-day TDF reached only P102.53 billion, with the BSP accepting all tenders.

The accepted yield for the 28-day facility was within the range of 3.375-3.5 percent.

“The results of today’s auction reflect the continued preference for the short-term tenor in anticipation of near-term events like the UK elections and the next Fed meeting,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.

The next Fed meeting will held this June.

“The outturn in the 28-day deposits could have been influenced by the nearing end date for the winding down of trust unit placements in the TDF,” Tetangco added.

Last year, the Monetary Board, the BSP’s highest policymaking body, decided to discontinue trust entities’ placements in the TDF beginning July this year.

“Overall, the results do not appear to show a significant change in system liquidity from recent auctions,” Tetangco said.

Next week, the BSP will again offer a total of P180 billion in TDF.

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