MANILA — The Bangko Sentral ng Pilipinas (BSP) has cut to PHP40 billion the offering for its 28-day Term Deposit Facility (TDF) for the Dec. 6, 2017 auction from the previous PHP90 billion offering after the government was able to sell more than PHP100 billion worth of retail treasury bond (RTB) last week alone.
During the rate setting auction for the RTB last Nov. 20, the Bureau of the Treasury (BTr) auction committee accepted PHP130 billion worth of tenders, way higher than the PHP30 billion initial offering due to strong demand.
Offering for the debt paper, intended for small investors since minimum placement is PHP5,000, is until Wednesday this week, Nov. 29.
BSP Deputy Governor Diwa Guinigundo clarified that the cut in the 28-day TDF offering next week has been “on the table” and does not mean that monetary officials now consider that domestic liquidity is tightening.
“It’s something that we consider moving forward,” he said.
Guinigundo said that while the BTr was able to get more than PHP100 billion from the RTB sale “that will be deposited with the BSP and depending on their needs, that will have to be disbursed which means that liquidity will also move out of the BSP and that can be used again by the system.”
“One should be very careful when we say that because the Treasury was able to get more than PHP30 billion, the market becomes tight. It will still move out of the BSP once the government starts funding its various projects or even to settle some of their payables. There will be liquidity going around the system,” he said.
“Changes in the volume offering either for the seven days or 28 days is something that can be announced one week before the actual offering. We need to be market-based depending on the liquidity forecast of the BSP,” he added.
In this week’s auction, the 28-day facility attracted PHP43.376 billion tenders, lower than the PHP90 billion offering but higher than the PHP40.361 billion bids in last week’s auction. The auction committee accepted all the bids.
Rate of this tenor fell to 3.4920 percent from last week’s 3.4926 percent but bid coverage ratio improved to 0.5042 from last week’s 0.4485.
Rate of the seven-day facility also went down to 3.4005 percent from last week’s 3.4057 percent.
Bid coverage ratio also declined to 0.9338 from 1.3104 after bids amounted to PHP 37.351 billion.
While offering for the 28-day facility for next week was cut to PHP40 billion offering for the seven-day facility was maintained at PHP40 billion.