TDF oversubscribed but yields fell

The central bank’s auction of term deposit facility (TDF) attracted P480.04 billion bids on Wednesday, April 6, while the average interest rates for the two tenors dropped this week.

The tenders were lower compared to last March 30 auction of P538.81 billion. The offered volume this week however was higher at P410 billion compared to P390 billion last week.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said both tenors were oversubscribed with bid-to-cover ratios at 1.11x and 1.21x, respectively, for the 7-day and 14-day tenors.

BSP Deputy Governor Francisco G. Dakila Jr.

“The weighted average interest rates (WAIR) of both tenors continued to decline from their rates last week,” noted Dakila. The WAIR of the 7-day tenor decreased by 1.478 basis points while 14-day tenor also dropped by 3.162 basis points.

“The accepted yields in the 7-day TDF remained low but widened to a range of 1.8500-1.9900 percent. Meanwhile, accepted yields in the 14-day TDF shifted lower but widened to a range of 1.8250-1.9750 percent,” he added.

Overall, Dakila said the results of the TDF auction “reflect continued ample liquidity in the financial system even as the tax deadline and Holy Week approach.”

The 7-day TDF was offered higher at P170 billion from P160 billion last week. It received P189.30 billion tenders, lower than March 30’s P211.87 billion. The average rate decline to 1.9177 percent from 1.9325 percent. The bid coverage ratio slipped to 1.1135 from 1.3242.

The 14-day TDF also had a higher volume of P240 billion from P230 billion previously. Tenders amounted to P290.74 billion, much lower than last week’s P326.94 billion. The yield was down to 1.9490 percent from 1.9806 percent. The bid coverage ratio decreased to 1.2114 from 1.4215.

The TDF is BSP’s primary liquidity-mopping up facility to manage inflation.

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