Market still prefers short-dated TDF

The market’s preference for short-dated term deposits being auctioned off by the Bangko Sentral ng Pilipinas (BSP) was sustained Wednesday while banks still veered away from the longer tenor.

For the P40-billion seven-day term deposit facility (TDF) offering, tenders amounted P52.579 billion, making the auction oversubscribed and reversing the two previous weeks of undersubscription.

The yield for the one-week TDF further rose to 3.25-3.4 percent from 3.15-3.45 percent last week.

Bids for the P140 billion in 28-day TDF, meanwhile, reached only P122.268 billion, which were all awarded by the BSP.

The accepted yield for the one-month facility stayed within 3.425-3.5 percent, similar to last week’s range.

Next week, the BSP will still 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.

Last week, BSP Deputy Governor Diwa C. Guinigundo said the weekly TDF auction results “continue to demonstrate that: one, banks have been funding more loans and investment in government securities; and two, short-dated placements are preferred by the market.”

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