There’s adequate liquidity in the system –Tetangco

BSP keeps TDF volume

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. yesterday said despite continued mixed results in the weekly term deposit auction, there is sufficient liquidity to keep markets satisfied.

Tetangco noted that in assessing the overall liquidity situation – “we judge that there’s adequate liquidity in the system” but that they will “continue to monitor these (situations) and see if there’s a need to adjust at some point.”

“But, right now, the auction amounts are still appropriate at this point,” he told reporters at the sidelines of the Special Testimonial Luncheon given to him by the Joint Membership Meeting of seven groups led by the Financial Executives Institute of the Philippines as main host.

During yesterday’s regular term deposit facility (TDF) auction, the 28 days attracted tenders worth R111.128 billion versus offer of R140 billion. The longer-dated tenor continue to be undersubscribed, fetching a weighted average accepted yield 3.4760 percent. Bid coverage ratio stood at 0.7938.

The 7-days kept up with the market liquidity demand, it had tenders amounting to R68.564 billion versus offer of R40 billion. The weighted average accepted rate was at 3.1918 percent. The bid coverage ratio was at 1.7141.

“The 7-day tenor is oversubscribed again so there continues to be strong interest in the short term of the curve,” observed Tetangco.

“For the 28 days, the interest rate was basically flat relative to last week and it was also undersubscribed again. Factors behind this will be the unwinding of the trust departments of their placements in the TDF, increased lending by the banks to their corporate clients and also there were private issues prior to the auction so some of the funds went to those issues,” added Tetangco.

The BSP earlier this month adjusted the volume of its TDF and effectively shifting the offer size based on demand. Since the 28-day TDF continues to be undersubscribed in contrast to the steady interest in the shorter-dated tenor, its volume was cut from R150 billion to R140 billion while the 7 days’ offer size was raised to R40 billion from R30 billion.

The TDF volume continues to be at R180 billion combined.