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TDF rates mixed in oversubscribed auction

The central bank’s term deposit facility (TDF) has a slightly lower volume this week of P350 billion while yields ended mixed.

The 28-day TDF’s offer was cut from P50 billion from its September 9 auction to P20 billion ahead of the Bangko Sentral ng Pilipinas’ (BSP) first offering of BSP Bills of the same tenor on Friday.

 “The results in (Wednesday’s) auction continue to support the view that liquidity in the financial system remains ample,” said BSP Deputy Governor Francisco G. Dakila Jr. He said the BSP’s “calibration of its monetary operations will continue to be guided by its assessment of market developments and liquidity conditions.”

The longest-dated TDF received a lower tender amount this week of P49.73 billion versus P93.77 billion previous auction, and the average rate fell to 1.8409 percent from 1.8518 percent.

On Friday, the BSP will offer P20 billion of BSP Bills. It has not announced when it will offer BSP Bonds which will have longer maturities.

Overall, the TDF this week attracted P527.98 billion bids, lower than September 9’s P541.44 billion.

The 7-day tenor had a higher volume this week of P160 billion from P150 billion last auction, and it received P212.57 billion tenders. Its average rate increased to 1.8377 percent from 1.8276 percent.

The 14-day TDF also had a higher offer this week of P170 billion from P160 billion. It continued to be

oversubscribed with P265.68 billion tenders. Yields dropped to 1.8460 percent from 1.8479 percent.

 “All tenors remained oversubscribed receiving tenders for the 7-day, 14-day and 28-day tenors at 1.33x, 1.56x and 2.49x their respective offer volumes,” said Dakila.

He also noted that the average interest rate for the 7-day TDF increased by 1.02 basis points (bps) while the 14-day and 28-day tenors decreased by 0.19 bp and 1.09 bps, respectively. “The range of accepted yields remained narrow for the 7-day TDF at 1.785-1.890 percent, 14-day TDF at 1.800-1.870 percent and 28-day TDF at 1.783-1.852 percent,” he added.

The BSP resumed its authority to sell securities as bills and bonds in 2019 when its charter was amended after almost 20 years of waiting.

The BSP will offer initially only BSP Bills at a small amount to test the market. Also, the BSP said that for the moment, the market has a preference for shorter tenors. The P20 billion offer is based on current liquidity conditions.

Source: Manila Bulletin (

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