Preference for short term tenors marks TDF auction

THE Bangko Sentral ng Pilipinas said it raised P355.79 billion out of its offer of P360 billion from the term-deposit facility (TDF) auction on Wednesday, higher than the P260 billion last week as the central bank saw preference for the shorter term tenor.

The total offer volume was allocated between the 7-day was at P200 billion, up from last week’s P150 billion and 14-day tenors at P160 billion up from P110 billion.

As light under subscription was seen with the 14-day TDF, with bidto-cover ratios at 1.03 times and 0.97 times the respective offer volumes for the 7-day and 14-day TDF, BSP Deputy Governor Francisco G. Dakila Jr. said

Total tenders received reached P362.59 billion, which the BSP said was well within its expected volume range.

The BSP awarded P200 billion, from P206.8 billion in bids, in the 7-day tenor and accepted P155.790 billion in the 14-day tenor.

The resulting weighted average interest rates for the awarded bids in both tenors continued to rise from last week.

The weighted average interest rates for the 7-day TDF rose by 3.9429 basis points to 6.2860 percent, while for the 14-day TDF increased by 4.7972 basis points to 6.3803 percent. The yields accepted for both tenors also shifted higher but narrowed the band. The 7-day tenor moved to a range of 6.0750 to 6.4 percent, while that for the 14-day tenor stood at 6.2 to 6.6 percent.

The results of the TDF auction reflected the pass-through of the 50 basis points rate hike by the BSP last December 15.

“Eligible counterparties’ inclination for the shorter tenor was also observed amid preference for cash over the upcoming holidays. Going forward, the BSP’S monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” Dakila said in a statement.