TDF results still mixed, tenders short of offers

The central bank’s term deposit facility (TDF) auction continue to have mixed results and tenders were short off the offer as banks – as expected by the Bangko Sentral ng Pilipinas (BSP) – are keeping their cash close at hand for the long Lent weekend.

This week’s auction had a reduced volume of R90 billion compared to the previous week’s R110 billion. Tenders amounted to R90.70 billion for all three tenors.

The 7-day TDF’s weighted average rate dipped to 3.1651 percent from 3.1768 percent. Bids totaled R46.485 billion against offer of R50 billion.

The 14-day and the 28-day, same as last week, continue to attract higher rates of 3.2788 percent and 3.4232 percent, from the previous’ average rates of 3.2451 percent and 3.3416 percent, respectively.

The two-week TDF’s bids amounted to R32.133 billion, above the offer of R30 billion. The 28-day received tenders of R12.087 billion, also more than offer of R10 billion.

The TDF, as the BSP’s open market operation, is a liquidity management tool. The auction, as part of the interest corridor system, began on June 3, 2016.

The reduction of the auction size from R110 billion to R90 billion is temporary. BSP Governor Nestor A. Espenilla Jr. has said that the weekly TDF auction will revert back to normal after Holy Week.

The TDF’s auction size is reviewed and determined by liquidity forecasts and communicated to the market one week ahead.