Manila Bulletin

TDF rates con­tinue to drop at auc­tion

- By LEE C. CHIPONGIAN

The Bangko Sen­tral ng Pilip­inas (BSP) will still of­fer R180 bil­lion in its term de­posit fa­cil­ity (TDF) auc­tion as March ap­proaches while its rates con­tinue to de­cline.

Dur­ing Wed­nes­day’s TDF trans­ac­tions, the 7-day term de­posits re­ceived ten­ders amount­ing to R51.07 bil­lion against award of R30 bil­lion. Its weighted av­er­age ac­cepted rate de­creased to 3.0103 per­cent from last week’s 3.0219 per­cent.

The 28 days were also over­sub­scribed at R204.045 bil­lion ver­sus of­fer and award of R150 bil­lion. Its weighted av­er­age ac­cepted yield dropped to 3.4007 per­cent from the pre­vi­ous week’s 3.4106 per­cent.

The BSP an­nounced yes­ter­day that it will con­tinue to of­fer R180 bil­lion on March 1, as R150 bil­lion for the 28 days and R30 bil­lion for the 7 days. The amount has been in place for the last 13 weeks of the auc­tion.

The cen­tral bank makes use of its de­posit fa­cil­ity to man­age liq­uid­ity by mop­ping up ex­cesses in the sys­tem. The TDF was part of the in­ter­est rate cor­ri­dor (IRC) frame­work that the BSP adopted in June of last year to man­age in­ter­est rate volatil­ity and to bring mar­ket rates closer to the BSP bench­mark.

Ba­si­cally the IRC is a sys­tem for guid­ing short-term mar­ket rates to­wards the BSP pol­icy rate. This is the overnight re­verse re­pur­chase rate which has re­mained flat at three per­cent since June 2016.

The BSP has in­creased the TDF vol­ume to R180 bil­lion on De­cem­ber 1, or up by R50 bil­lion. The auc­tion size has been raised seven times since the IRC was first im­ple­mented.

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