28-day TDF remains undersubscribed

The central bank’s longer-dated term deposit facility (TDF) – now reduced to R110 billion offer size – remains undersubscribed with R84.415billion bids during yesterday’s weekly auction.

The two-tenor TDF received total tenders of R127.333 billion versus offer volume of R150 billion. This is the first auction with the reduced offer size of R150 billion from previous months’ R180 billion.

The Bangko Sentral ng Pilipinas (BSP) announced yesterday that the September 13 auction will keep the R150-billion volume, broken down as R110 billion for the 28 days and R40 billion for the 7 days.

During Wednesday’s auction, the weighted average rate of 28-days decreased to 3.4910 percent compared to the previous week’s 3.4961 percent. It has a bid coverage ratio of R0.7674

The 7-day tenor fared better with R42.918-billion tenders against offer of R40 billion. Its weighted average accepted yield increased to 3.334 percent from last Wednesday’s 3.3162 percent. Demand continues with a bid coverage ratio of 1.0730.

This week the BSP cut the 28-day offer size, it is the first time it adjusted and decreased the overall TDF volume since December 1.

BSP Deputy Governor Diwa C. Guinigundo has said that since banks are lending and the volume of excess liquidity they need to mop was lesser than before, the TDF’s 28days were persistently undersubscribed.