Market snaps up ₱342.7 B term deposits

The central bank’s term deposit facility (TDF) received ₱342.737 billion bids on Wednesday, Feb. 21, against an auction size of ₱310 billion. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the oversubscription is due mostly to demand in the shorter-dated tenor or the 7-day TDF. On Wednesday, the BSP offered the same volume of ₱310 billion, of which ₱180 billion were allocated to the 7-day tenor and ₱130 billion to the 14-day tenor. “Total tenders reached ₱342.737 billion, which was slightly above the BSP’S expected volume range,” said Dakila. The tenders resulted in a bid-to-cover ratios of 1.307 for the 7-day tenor and 0.827 for the 14-day TDF which was undersubscribed. “The undersubscription in the 14-day TDF indicated participants’ preference for the shorter tenor in anticipation of loan releases and the settlement of the Bureau of the Treasury’s Retail Treasury Bond issuance by end-february,” said Dakila. The government is currently offering RTB-30 to small investors until Feb. 23. Meanwhile, the BSP fully awarded its offering in the 7-day TDF while accepting ₱107.450 billion for 14-day tenor. The weighted average interest rates for the 7-day tenor fell by 1.1706 basis points to 6.5756 percent while the 14-day yield also declined by 0.7078 bps to 6.6041 percent. Dakila said the range of accepted yields was relatively unchanged at 6.5000 percent to 6.5835 percent in the 7-day TDF, and 6.5800 percent to 6.6250 percent in the 14-day tenor. The BSP’S TDF is an interest rate corridor facility to bring the market rates closer to the BSP key rate. The facility, a primary liquidity management tool, absorbs excess money in the financial system to control inflationary pressures. (Lee C. Chipongian)