TDF yields drop on BSP’s policy easing

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) dropped on Wednesday as the central bank resumed offering the longest 28-day tenor and following the rate cut last week.

Total bids for the term deposits auctioned off by the BSP on Wednesday amounted to P441.631 billion, more than double the P210 billion on offer. This was also higher than the P418.775 billion in tenders seen last week for a P170-billion offer that only included the seven- and 14-day deposits.

The one-week papers recorded total tenders of P232.3 billion, higher than the P120 billion on the auction block but lower than the P278.475 billion logged the previous week.

Lenders sought yields ranging from 1.75% to 1.79% for the seven-day deposits, sharply lower than the 2.25% to 2.2505% band logged on June 24. With this, the average rate for the one-week papers stood at 1.7573%, down by 49.31 basis points (bps) from the 2.2504% recorded last week.

Meanwhile, the 14-day papers fetched total bids of P149.68 billion, going beyond the P70 billion up for grabs as well as the P140.3 billion in bids seen last week for the P50 billion on offer.

Banks asked for rates between 1.75% and 1.78% for the two-week deposits, also lower than the 2.25% to 2.251% range logged last week. This caused the average rate for the 14-day papers to drop by 49.86 bps to 1.7522% from the 2.2508% in the previous auction.

For 28-day term deposits, bids totaled P232.3 billion, surpassing the P120 billion auctioned off by the BSP as well as the P79.813 billion in tenders seen against a P50-billion program on March 11, which was when the papers were last offered.

Yields on the one-month papers ranged from 1.75% to 1.79%, plunging from the 3.675% to 3.78% band recorded in the March 11 auction. The average rate for the 28-day deposits stood at 1.7562%, sinking by 198.74 bps from the 3.7436% quoted previously.

The TDF is the central bank’s primary tool to shore up excess liquidity in the financial system and to better guide market interest rates. —