MANILA -- The rates of Bangko Sentral ng Pilipinas’ (BSP) Term Deposit Facility (TDF) registered another uptick Wednesday, hopping on the bandwagon of domestic interest rates, and bid coverage ratios tagged along despite the undersubscription in most tenors.
Data released by the central bank showed that the rate of the seven-day facility rose to 4.9420 percent from 4.8291 percent during the auction Wednesday last week.
Its bid coverage ratio also improved after it rose to 0.7224 from 0.7082 in the previous auction even after tenders only amounted to PHP28.894 billion, lower than the PHP40 billion offering.
The rate of the 14-day facility increased to 5.0715 percent from 4.8642 percent last week.
Banks submitted a total of PHP19.837 billion, lower than the PHP20 billion offering.
Despite this, the facility’s bid coverage ratio went up to 0.9919 from 0.9660 last week.
Average rate of the 28-day facility inched up to 5.1103 percent from 4.9162 percent.
Bid coverage ratio increased to 1.0697 from 0.5249 during the auction last November 21 after tenders reached PHP10.697 billion, higher than the PHP10 billion offering.
BSP Deputy Governor Diwa Guinigundo attributed the improvements in the TDF’s rates and bid coverage ratios to banks’ positive outlook on inflation.
“Market appears confident about the positive prospects of lower inflation for the rest of 2018 and the next two years. Hence, they can afford to have a slightly longer view,” he said in a reply to an SMS from PNA.
This, as inflation last October held steady at 6.7 percent, unmoved from the previous month’s level.
Guinigundo, on the other hand, pointed out that “in the case of the 7 days their placement must really be their excess liquidity after making some allowance for the long weekend.”
“Hence, they need to deploy them even at lower yields,” he added.
Traditionally, banks submit lower bids during TDF auctions ahead of a holiday.
In the last quarter of 2017, undersubscription was high because of the Christmas holidays and monetary officials said banks prefer to hold on to their cash to efficiently cater to their clients’ requirements. (PNA)
