TDF rates increase; tenders mixed ahead of long weekend
The central bank’s weekly auction of term deposit placements fetched higher rates across all three tenors while tenders were mixed as banks hold on to cash during the long weekend.
The 28-day term deposit facility (TDF), offered lower this week at 110 billion compared to October 24’s 120 billion, had tenders worth 113.91 billion. Yields were up at 4.8798 percent from the previous Wednesday’s 4.8493 percent.
The 7 days, also offered at a lower volume this week of 140 billion from 150 billion, attracted bids of 144.32 billion compared to last week’s 153.64 billion. Average rate rose to 4.7249 percent from the previous week’s 4.7196 percent.
The BSP reduced both the 7-day and 28-day offer this week as they anticipate lower demand ahead of the observance of the November 1, All Saints’ Day, and November 2, All Souls’ Day.
The 14-day TDF, in the meantime, received tenders amounting to 123.42 billion against nextgenmedia@gmail.com offer of 120 billion. It is lower than the 128.50 billion bids last October 24. The mid-tenor’s average rate increased to 4.7631 percent versus last Wednesday’s 4.7553 percent.
Overall, the TDF’s total bids amounted to 181.66 billion against offer of 170 billion.
The TDF continue to be an effective liquidity-absorbing tool for the BSP. But with less excess liquidity to mop up, the BSP has been tweaking TDF volume based on demand. The lowest offer size for October was 160 billion overall.
BSP Governor Nestor A. Espenilla Jr., back from his fiveweek medical leave, has said that the TDF will continue to reflect market conditions as one of its main liquidity tools at the moment.
The weekly auction – driven by supply and demand conditions of the money market – has reflected the increase in BSP’s policy rates in recent weeks. The key BSP rates were raised by a combined 150 basis points since May this year to rein the elevated inflation expectations.