BSP cuts TDF offering for Holy Week auction

BSP Building (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — Philippines’ monetary officials cut the offering for the 14-day and 28-day Term Deposit Facility (TDF) for the auction set on March 28, 2018.

Data released by the Bangko Sentral ng Pilipinas (BSP) Wednesday night showed that the 14-day facility will be offered for PHP30 billion in next week’s auction, down from the PHP40 billion this week.

Also, offering for the 28-day facility was cut to PHP10 billion from PHP20 billion until this week.

Volume offering for the seven-day facility was kept at PHP50 billion.

During the auction this Wednesday, the longer-tenor facilities registered undersubscription unlike the seven-day facility.

The 14-day facility, which was offered for PHP40 billion, received bids amounting to PHP35.955 billion and the longest-tenor TDF got tenders amounting to PHP19.963 billion, lower than the PHP20 billion offering.

Monetary officials, in turn, accepted all the bids for both tenors.

Meanwhile, the seven-day facility received PHP72.293 billion-worth of bids, higher than its PHP50 billion offering. It was awarded in full.

Earlier, BSP Department of Economic Research (DER) Deputy Director Dennis Lapid said decisions on how much the TDF offer volume would depend on information on domestic liquidity at a certain time.

“We calibrate our auction volume based on how much the market has on a given date…based on our information on how much is there in the system,” he said.

The BSP has adjusted TDF volume offering for several times already.

When the facility was first introduced in June 2016, the seven-day TDF was offered for PHP10 billion and the 28-day facility for PHP20 billion.

In the initial auction, the shortest tenor received PHP82.438 billion worth of bids while the longer-tenor facility attracted PHP117.271 billion. Both were awarded in full.

As liquidity situation changes, the TDF registered over and undersubscriptions, thus, the change in volume offering.

Also, the 14-day facility was introduced just recently, particularly during the auction on February 14, 2018 as banks request for additional tenors. It was initially offered for PHP20 billion.

BSP Governor Nestor A. Espenilla Jr., in a WhatsApp message to journalists Wednesday night, urged the latter to “not overthink” about the cut in volume offering.

“It just reflects our forecast that banks tend to want to hold more cash in anticipation of a long holiday,” he said referring to the Holy Week holidays next week, particularly from Maundy Thursday to Easter Sunday.