BSP’s longer-dated TDF undersubscribed
The central bank’s auction of 28-day term deposits was undersubscribed yesterday while average rates for all tenors had mixed results although the movements were small.
The Bangko Sentral ng Pilipinas (BSP) received tenders amounting to R140.761 billion for the 28-day term deposit facility (TDF) against offer of R150 billion. The tendered total was lower compared to the previous week’s R176.891 billion.
The accepted yield rates for the 28 days were 3.2000 percent to 3.5000 percent and the weighted average accepted yield was 3.3028 percent. Bid coverage ratio was at 0.9384 versus last week’s 1.1793.
The shorter-dated term deposits had an amount tendered of R39.186 billion, more than offer of R30 billion. The amount tendered was still lower than last week’s R41.125 billion. The accepted yield was 2.9000 percent to 3.0070 percent for a weighted average accepted rate of 2.9896 percent, sligthly higher compared to the previous week’s 2.9823 percent. The bid coverage ratio dipped to 1.3062 from the last Wednesday’s 1.3708.
BSP Governor Amando M. Tetangco Jr. has said that demand for the TDF is still good and he expects changes in the bid to cover ratio based on a week per week demand.
Tetangco also said that there was no immediate need to adjust auction settings any time soon.
The BSP also announced yesterday that they will keep the R180-billion auction volume until April 5. The TDF size has been unchanged for the past 17 weeks.
The BSP adopted the interest rate corridor (IRC) system last June 3, 2016 to help ensure that money market interest rates move within a “reasonably close range” around the policy rate.
During its last policy meeting, the BSP maintained the overnight borrowing rate at three percent and the lending rate at 3.5 percent. It will have its next policy meeting today.
Tetangco has repeatedly said that there was no urgent reason to adjust rates and this was his view even after the US Federal Reserve raised its own rates last week by 25 basis points, as well as reiterated its intention of a gradual interest rates hike.