Yields mixed at TDF auction

The central bank’s weekly term deposit facility (TDF) had higher bids this week of 180.89 billion versus the previous Wednesday’s 168.09 billion, exceeding the auction offer of 150 billion.

The 7-day TDF’s rate fell to 5.1248 percent this week from 5.1565 percent, while bids again surpassed the offer of 120 billion at 138.12 billion. Tenders were higher compared to February 13’s 128.08 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

Also offered at 120 billion, the 14-day tenor attracted 133.59 billion versus 127.26 billion last week. Yields were up at 5.1659 percent from 5.1250 percent last Wednesday.

BSP Deputy Governor Diwa C. Guinigundo said they are reviewing constantly several options to finetune the auction-based open market operations, as they forecast ample liquidity for some time. Liquidity supply will come from the government’s “sustained disbursement” for infrastructure development spending. Money supply will be redeposited to the banking system for lending and/ or placed with the BSP.

The longest-dated TDF, the 28 days which is offered at 110 billion, had lower bids amounting to 19.18 billion, also down from the previous week’s 112.75 billion. Average rate slipped to 5.1822 percent from 5.1839 percent last week.

TDF, first implemented in 2016 as guide for influencing market rates closer to the policy rate, is primarily a liquidity management tool. It was implemented when the the central bank shifted to the interest rate corridor framework.