Banks snub BSP bait as alternative draws more attention

After going full throttle for the record-high volume of retail treasury bonds (RTBs), market appetite went tepid for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF).

Although the central bank already slashed its offering to P80 billion, the 28-day tenor of the facility, in particular, remained undersubscribed on Wednesday.

Bids for the longest tenor in that financing window attracted only P32.48 billion, albeit the BSP offered a total of P40 billion. The BSP awarded a yield of 3.47-3.5 percent.

For the seven-day TDF, banks tendered P41.269 billion. The BSP fully awarded the P40 billion it offered at 3.3-3.5 percent yield.

“Lower TDF subscription means bank funds are deployed to lending, foreign exchange purchases, and investment in government securities, including RTBs,” BSP Deputy Governor Diwa C. Guinigundo said in a text message to reporters.

The Bureau of the Treasury raised P255.4 billion from its sale of RTBs to small investors.

The government’s 20th RTB sale was the largest to date.

Next week, the BSP will again offer P40 billion each in the seven- and 28-day TDFs.

The BSP had cut the total TDF offering for December from P130 billion in November and P140 billion in October.

Guinigundo said the BSP was already mopping “less” liquidity “and that is precisely expressed in our recent announcement of the reduction in our offerings.”

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.