TDF auction attracts ₱324.3-B bids

The central bank’s term deposit facility (TDF) received ₱324.325 billion in tenders versus offer of ₱230 billion on Wednesday, Dec. 20. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the auction had “sustained strong demand.” The 7-day TDF had an offer of ₱120 billion, lower than the previous week’s ₱140 billion, while the 14-day tenor had a volume of ₱110 billion, also lower from last week’s ₱130 billion. Total tenders reached ₱324.325 billion that Dakila said was well above the BSP’S expected volume range for the week. The BSP accepted ₱230 billion of the total tenders. “Respective bid-to-cover ratios for the 7-day and 14-day tenors were at 1.618 and 1.184x, further indicating sustained strong demand for the term deposits, especially the shorter tenor,” he said. Meanwhile, this week’s weighted average interest rate (WAIR) for the 7-day tenor was lower by three basis points (bps) to 6.6329 percent. The 14-day WAIR also fell by 1.9 bps to 6.6563 percent. “The range of yields accepted in the 7-day and 14-day tenors narrowed to 6.60006.6500 percent and 6.6250-6.6800 percent, respectively,” noted 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. As of Dec. 14, the BSP benchmark rate is at 6.5 percent while the interest rates on the overnight deposit and lending facilities are at six percent and seven percent, respectively.(lee C. Chipongian)