BSP’s TDF auction gets lower tenders

The auction of term deposit facility (TDF) were mixed on Wednesday, both on bids and yields, with R100.63 billion tendered compared to last week’s R113.16 billion, Bangko Sentral ng Pilipinas (BSP) data show.

The 7-days is the only tenor with oversubscribed tenders or R64.409 billion against offer of R40 billion, also more than last week’s R58.282 billion.

Banks were more modest in bidding for the 14-days and 28days which were below offers. The 14-days received R28.016billion bids compared to the previous week’s R39.095 billion and the offer of R40 billion.

The longer-dated TDF, in the meantime, attracted only R8.209 billion against offer of R20 billion and likewise lower than the previous week’s R15.781 billion.

In terms of average rates, this week’s yield for the 7-days are down to 3.6927 percent from 3.6979 percent. The 14-days and 28-days’ average rates increased to 3.7342 percent and 3.7326 percent, respectively, from 3.7222 percent and 3.7264 percent.

BSP Governor Nestor A. Espenilla Jr., in Tokyo yesterday for a Philippine economic briefing, said that after the adoption of the interest rate corridor (IRC) system two years ago – which paved the way for the weekly TDF auction – the BSP’s open market operations “have become more effective in transmitting our monetary policy actions to the real economy.”

“In line with our signals, market rates have been trending upwards consistent with global market conditions. For example, the domestic interbank call loan rate (IBCL) is up by 80 bps from a year ago. The benchmark 91-day peso Tbill rate has already increased by more than 120 bps,” noted Espenilla.

With TDF in placed as an effective liquidity management tool, the BSP has cut the reserve requirement ratio (RRR) twice this year and reduced the ratio by 200 basis points.