BSP’S TDF has lower demand this week

The central bank’s term deposit facility (TDF) was offered at ₱210 billion on Wednesday, Feb. 28 but only received tenders worth ₱190.891 billion. Based on Bangko Sentral ng Pilipinas (BSP) data, the TDF volume was significantly lower compared to the previous week’s ₱310 billion. On Wednesday, the BSP only auctioned off ₱120 billion for the 7-day tenor compared to ₱180 billion last week, while it offered ₱90 billion for the 14-day tenor versus ₱130 billion previously. “Total tenders declined to ₱190.891 billion, which was within the BSP’S expected volume range,” according to BSP Deputy Governor Francisco G. Dakila Jr. He noted the respective bid-to-cover ratios for the 7-day and 14-day tenors of 0.966 and 0.833, which meant there was lower demand “as market participants allotted funds for loan releases and the settlement of the Bureau of the Treasury’s Retail Treasury Bond issuance.” Meanwhile, the BSP partially awarded ₱113.931 billion out of the ₱115.931-billion bids for the 7-day tenor and fully awarded the ₱74.960-billion bids for the 14-day tenor. The weighted average interest rates for the TDF declined this week. The 7-day TDF dropped 1.0625 basis points (bps) to 6.5650 percent while the 14-day tenor declined by 0.9243 bp to 6.5948 percent. “The range of accepted yields was relatively unchanged—6.5100-6.5800 percent in the 7-day TDF and 6.57506.6250 percent in the 14-day TDF,” said Dakila. The BSP’S TDF is an interest rate corridor facility to bring the market rates closer to the BSP key rate. Basically, the TDF absorbs excess money in the financial system to control inflationary pressures. (Lee C. Chipongian)