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TDF yields up, bids lower at P265 B

TDF yields up , bids lower at P265 B   The average rates of all three tenors of the central bank’s term deposit facility (TDF) increased this week while bids were lower at P264.94 billion as banks held on to their funds as they assess the country’s economic future amid the ongoing health crisis.

   The Bangko Sentral ng Pilipinas (BSP) offered a lower TDF volume for the 7-day, 14-day and 28-day, or a combined P320 billion versus P380 billion last August 5.    BSP Deputy Governor Francisco G. Dakila Jr. said the market is still digesting the worse-than-expected second quarter GDP contraction of 16.5 percent which plunged the economy into a pandemic-related recession.    

“The TDF auction results reflected in part the temporary impact of the scheduled settlement of the Retail Treasury Bonds as well as the market participants’ reaction to recent developments such as the release of the lower-than-expected second quarter 2020 GDP data,” said Dakila.

But, he added, “(the) financial system liquidity remains ample as majority of bids remained close to the ODF (overnight deposit facility) rates. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of market developments and liquidity conditions.”

 The offer volume for the 7-day tenor is still P140 billion but it received only P98.58 billion in tenders compared to P196.23 billion last week. The average rate however went up to 1.7810 percent from 1.7542 percent.

 The 14-day TDF’s volume dropped to P130 billion from P180 billion last week. Bids amounted to P104.13 billion while yields went up to 1.8658 percent from 1.7566 percent, the biggest averate rate increase during the auction.

 The 28-day TDF also had a lower offer of P50 billion from P60 billion of the previous Wednesday. Bids totaled P62.23 billion which was more than the offer. Its average rate rose to 1.7770 percent from 1.7655 percent.

 Dakila said the 7-day and 14-day tenor were undersubscribed by 0.70x and 0.80x of their offered volumes while the 28-day TDF was oversubscribed by 1.24x.

  “The average interest rates for the 7-day, 14-day and 28-day tenors rose to 1.781 percent (higher by 2.68 bps), 1.866 percent (higher by 10.92 bps) and 1.777 percent (higher by 1.15 bps), respectively,” the BSP official said. He also noted that the range of accepted yields have “widened”. The 7-day tenor had a 1.750-2.250 percent range, while the 14-day and 28-day were presented with 1.750-2.625 percent and 1.753-1.813 percent.

 BSP officials said they continue to correctly assess demand volume for the TDF and that results are within their expectations.

 The TDF is currently the BSP’s main liquidity management tool.

Source: Manila Bulletin (

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