The Bangko Sentral ng Pilipinas (BSP) reduced the offering of its weekly term deposit facility (TDF) by P50 billion to P510 billion on Wednesday, Sept. 16, to reflect market demand.

BSP Deputy Governor Francisco G. Dakila Jr. said monetary operations “will remain guided by its assessment of the latest liquidity conditions and market developments.”

Dakila said however that auction results still indicate strong interest from market participants “amid sustained ample liquidity in the financial system.”

The TDF received P607.66 billion bids versus offer of P510 billion on Wednesday. This was lower than P614.07 billion last September 8. The offering last week was higher at P560 billion.

“There was oversubscription in both tenors with the 7-day and 14-day TDF receiving bids 1.44x and 1.09x their respective offer volumes,” said Dakila.

He also noted that the weighted average interest rate (WAIR) for both tenors were lower than their rates last week. “The WAIR for the 7-day settled 0.602-bp (basis point) lower to 1.7083 percent while that for the 14-day decreased by 0.944 bp to 1.7423 percent,” he said.

The accepted yields for both tenors remained low and narrowed to a range of 1.6900 percent to 1.7300 percent for the 7-day TDF and 1.7000 percent to 1.8999 percent for the 14-day tenor, said Dakila.

The 7-day TDF, offered lower at P150 billion compared to P160 billion previously, attracted P216.55 billion bids. This was more than September 8’s P191.36 billion. The bid coverage ratio rose to 1.4437 from 1.1960. The yield fell to 1.7083 percent from 1.7143 percent last week.

The 14-day TDF also had a lower volume this week of P360 billion from P400 billion. It received tenders worth P391.11 billion, down from P422.71 billion previously. The bid coverage ratio increased to 1.0864 from 1.0568. The average rate dropped to 1.7423 percent from 1.7517 percent.

The TDF was first introduced in 2016 with the BSP’s shift to an interest rate corridor framework. Last year, the BSP securities facility was implemented after years of market planning. The open market operations mop up excess liquidity from the financial system for inflation control and management.

Source: Manila Bulletin (