BSP raises TDF volumes as demand soars
THE BANGKO SENTRAL ng Pilipinas (BSP) will raise auction volumes for term deposits to P110 billion next month after this week’s sale fetched higher yields anew, with the central bank looking to raise the amount of weekly offers further.
The central bank’s offer of 28day term deposits fetched an average yield of 2.528% yesterday, the highest since the weekly auctions started June 8. Banks and trust companies asked for a rate between 2.5% and 2.563% which the BSP will pay them for parking their excess funds with the central bank’s facility. Demand for the month-long term deposits also reached P148.723 billion, about 1.9 times higher than the P80-billion offer.
Meanwhile, bids for the sevenday tenor hit P34.931 billion, roughly 3.5 times above the programmed P10 billion. The average yield remained at 2.5%, matching the floor of the BSP’s interest rate corridor.
The higher yield fetched for the longer-termed deposits was on track with the central bank’s projection and provides room to further increase auction volumes, BSP Governor Amando M. Tetangco, Jr. said.
FURTHER ADJUSTMENTS
“The increase in the 28-day TDF rate is consistent with our expectations,” Mr. Tetangco said in a text message to reporters. “There are further upward adjustments in the offering size that are being planned, depending on prevailing conditions at the time. The market bias seems to be for the longer tenor right now.”
The TDF auctions stand as the central bank’s main tool to arrest excess liquidity in the financial system, as the BSP eyes to bring market rates closer to its 3% benchmark.
The BSP will again offer P90billion term deposits next week, but raised the volume to P110 billion for Oct. 5. Broken down, banks and trust firms can vie for a total of P100 billion under the 28-day tenor, while the week-long term deposits remain at P10 billion.
This is the fourth hike since the weekly auctions started, which saw a monthly hike in the amount of term deposits.
The central bank chief added that they expect market demand for term deposits to “stabilize” once the BSP is able to migrate a “good level of funds” to the TDF.
Monetary officials earlier said that they may consider a modest and gradual cut in the 20% reserve requirement ratio imposed on big banks if at least half of the P1 trillion parked in the old special deposit account window are transferred to the TDF.