BSP Hikes Offering For 7-Day, 14-Day TDF

The Bangko Sentral ng Pilipinas (BSP) hiked the offering for its seven-day and 14-day Term Deposit Facilities (TDFs) for the auction on Feb. 21, 2017 following the strong appetite this week.

Data released by the central bank showed that offering for the shortest-tenor TDF next week was hiked to PHP50 billion from PHP40 billion this week while the 14-day facility was increased to PHP40 billion from PHP20 billion.

Offering for the 28-day TDF was maintained at PHP20 billion. This after banks tendered a total of PHP65.362 billion for the seven-day facility during the auction this week. The auction committee, however, awarded PHP40 billion based on the offering.

Weighted average accepted yield of the facility stood at 2.7232 percent, down from the 2.7278 percent last week.

Its bid coverage ratio this week is at 1.6341, down from last week’s 2.2143.

Tenders for the 14-day facility, which saw its first auction this week, reached PHP45.46 billion, higher than the PHP20 billion offering. The auction committee awarded PHP20 billion.

Weighted average accepted yield is 2.737 percent while its bid coverage ratio is 2.2730.

Banks submitted a total of PHP39.935 billion bids for the longest-tenor TDF, nearly twice the PHP20 billion offering but lower than last week’s PHP51.43 billion tenders. The auction committee awarded PHP20 billion.

The facility’s weighted average accepted yield declined to 2.9650 percent from last week’s 3.0183 percent. Bid coverage ratio this week also went down after ending at 1.996 from last week’s 2.5715.

BSP Deputy Governor Diwa Guinigundo traced the higher-than-offered bids across all tenors to the banking system’s very liquid position “following the sustained return of money to the banks after the holidays and the national government’s retail treasury bond float.”

“Based on our forecasting exercises, we have now the basis to declare the introduction of new tenor namely the 14-day term deposits,” he said.

“The BSP is also more flexible in considering fast changing liquidity conditions in determining the appropriate volume of liquidity to mop up to help attain price stability while offering more instruments to the capital markets,” he added. (PNA)

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