Bids for BSP’s 7-day TDF surpass offering, 28-day facility remain undersubscribed

Banks continue to shy away from the 28-day Term Deposit Facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) but the seven-day facility has regained its attractiveness. (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA—Banks continue to shy away from the 28-day Term Deposit Facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) but the seven-day facility has regained its attractiveness.

Data released by the central bank Wednesday showed that bids for the shorter-dated facility reached PHP41.342 billion, higher than the PHP30 billion offering and the PHP29.724 billion tenders in last week’s auction.

The auction committee made a full award for this tenor, which fetched a bid coverage ratio of 1.3781, higher than the 0.9908 last week.

The facility’s accepted yield remained between 2.9000-3.5000 percent but weighted average accepted yield rose to 3.3615 percent from the previous rate of 3.2109 percent.

On the other hand, the longer-tenor TDF remained undersubscribed after tenders only reached PHP86.166 billion, lower than the PHP150 billion offering and the PHP100.183 billion tenders last week.

The auction committee accepted all the bids and this resulted to a bid coverage ratio of 0.5744, lower than the 0.6679 in the previous auction.

The lower end of the accepted yield’s range was cut to 3.2500 percent from last week’s 3.3000 percent but the higher end is still at 3.5000 percent.

Weighted average accepted yield improved to 3.4565 percent from last week’s 3.4499 percent.

TDF is part of the BSP’s Interest Rate Corridor (IRC) program, which started in June 2016.

IRC is being implemented to help the central bank better manage inflation and promote long-term sustainable growth as well as enhance the link between the central bank’s policy stance and the real economy.