TDF auction undersubscribed ahead of gov’t work suspension, says BSP

Both tenors of the term deposit facility (TDF) auctioned off by the Bangko Sentral ng Pilipinas Wednesday were undersubscribed ahead of the suspension of government work due to President Rodrigo Duterte’s declaration of a National Day of Protest.

For the P40 billion in seven-day TDF, banks tendered only P36.89 billion, which the BSP accepted at a yield of 3.23-3.4 percent.

As for the P110 billion in 28-day TDF, bids reached P67.155 billion, which the BSP awarded at a range of 3.45-3.5 percent.

“Suspension of work appears to be the reason for the banks to keep funds with them,” BSP Deputy Governor Diwa C. Guinigundo said in a text message to reporters.

Guinigundo added that banks also continue to lend out as well as invest, hence the shortfall in tenders for the TDF.

Malacañang earlier announced work suspension in government offices on Sept. 21, Thursday.

But a Sept. 19 memorandum issued by BSP Governor Nestor A. Espenilla Jr. said there will be normal banking operations on Sept. 21.

“Clearing and settlement, cash servicing, and treasury operations (trading and settlement—ODF, OLF, Overnight RRP Facility and PDS) will observe normal operations,” Espenilla said.

Also, “it will be a regular reserve day in so far as computing for the reserve position of Sept. 21,” Espenilla added.

“All other BSP operations are suspended. All reports due may be submitted on Sept. 22 without penalty,” according to Espenilla.

Separately, the Bankers Association of the Philippines (BAP) said in a statement Wednesday that “all member-banks will remain fully operational despite the suspension of work in government offices on Sept. 21.”

“Normal check clearing operations, trading and other financial transactions will be observed to fully serve the banking public,” the BAP added.

Next week, the BSP will again offer a total of P150 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. /je