TDF auction undersubscribed

By Joann Villanueva

November 8, 2017, 6:06 pm

MANILA - - Rates of the central bank’s Term Deposit Facility (TDF) registered mixed results Wednesday even as both the seven- and 28-day facilities were undersubscribed.

Data released by the Bangko Sentral ng Pilipinas (BSP) Wednesday showed that weighted average accepted yield of the shorter-dated TDF posted an uptick to 3.3849 percent from 3.3548 percent last week.

Bids for this tenor amounted to PHP37.57 billion, lower than the PHP40 billion offering but higher than the PHP30.528 billion tenders in last week’s auction.

Bid coverage ratio this week improved to 0.9393 from last week’s 0.7632.

On the other hand, average accepted yield of the longer-dated tenor declined to 3.4908 percent from 3.4940 percent last week.

Tenders reached PHP86.511 billion, lower than the PHP90 billion offering and the PHP90.619 billion bids last week.

BSP Deputy Governor Diwa Guinigundo traced the undersubscription in the 28-day TDF  to banks’ stronger loans disbursement to fund “very robust economic activities.

Central bank data show that outstanding loans of commercial banks, excluding placements in the BSP’s reverse repurchase (RRP) facility, rose 21.1 percent last September, higher than the 20.4 percent expansion in the previous month.

Including RRP placements, bank lending went up by 20.1 percent in the ninth month this year, way faster than the 17.9 percent last August.

Guinigundo also said some banks recently issued long-term negotiable certificates of time deposits (LTNCDs), “which absorbed some liquidity from the market.”

“In short, what is happening is that we see the surplus funds in the system declining in volume that BSP normally mops up. Since these have decreased, the BSP would be simply siphoning less from the market,” he said.

“But the key point there is that the economic and financial requirements are being amply funded. That is positive for growth, that is positive for the financial system,” he added. (PNA)