TDF rates up across-the-board

By Joann Villanueva

March 7, 2018, 7:59 pm

MANILA -- Rate of the central bank’s Term Deposit Facility (TDF) rose across-the-board Wednesday, with tenders rising above the offering for all three tenors.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that rate of the seven-day facility improved to 3.1767  percent from last week’s 3.0685 percent.

Bid coverage ratio also increased to 1.6005 from 0.8750 last week after banks submitted a total of PHP80.026 billion worth of bids, up from the PHP50 billion offering and the PHP43.751 billion last week.

The auction committee awarded PHP50 billion for the facility.

Rate of the 14-day facility rose to 3.1674 percent from 3.0984 percent last week.

Tenders reached Php43.310 billion, higher than the Php40 billion offering, which was awarded in full this week.

Bid coverage ratio, on the other hand, declined to 1.0828 from last week’s 1.1124 since bids for this week’s auction was lower than the PHP44.497 billion last week.

Rate of the 28-day facility went up to 3.2627 percent from last week’s 3.1665 percent.

Bid coverage ratio also went down and ended at 1.1760 from 1.4440 last week after tenders reached PHP23.520 billion, higher than the PHP20 billion offering but lower than the PHP28.879 billion tenders in last week’s auction.

For the auction on March 14, the seven-day facility will still be offered for PHP50 billion, the 14-day facility for PHP40 billion and the 28-day facility for PHP20 billion.

BSP Governor Nestor A. Espenilla Jr. said volume for TDF offerings is assessed based not only on the domestic liquidity situation but also on the central bank’s needs vis-a-vis its participation in the foreign exchange market.

“I’ve been very transparent that we participate in the foreign exchange market and financially, every time the BSP, for example, intervenes in the foreign exchange market by selling dollars in the market, we are basically taking away pesos from the market,” he said.

The central bank chief said this activity “is a very powerful drain on liquidity.”

“That's why we look at this not so much on little pieces but we look at the totality of the liquidity forecast which considers many things - - the behavior of banks, the foreign exchange operations, our own open market activity and the behavior of government because government also operates. It is a complete picture we have to look at,” he added. (PNA)