MANILA -- The rates of all the Term Deposit Facility (TDF) tenors increased Wednesday as all facilities received above-offered bids.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that rate of the seven-day TDF rose to 5.1565 percent from 5.1411 percent during the auction last February 6.
At the same time, the rate of the 14-day facility went up to 5.1828 percent and the 28-day’s to 5.1839 percent.
These were at 5.1765 percent and 5.1788 percent for the 14-day and 28-day, respectively, in last week’s auction.
BSP offered the shortest tenor facility for PHP20 billion and received tenders amounting to PHP28.079 billion. This was fully awarded.
The uptick in tenders, from last week’s PHP22.593 billion, resulted to the improvement of the bid coverage ratio to 1.4040 from the previous auction’s 1.1297.
Tenders for the 14-day facility reached PHP27.259 billion, higher than the PHP20-billion offer and last week’s PHP16.9-billion worth of bids. The auction committee awarded this facility in full.
Bid coverage ratio increased to 1.3630 from last week’s 0.8450.
Tenders for the 28-day TDF reached PHP12.752 billion, higher than the previous auction’s PHP11.703 billion and the PHP10-billion offer.
Thus, the rise in the bid coverage ratio to 1.2752 from last week’s 1.1703.
BSP Deputy Governor Diwa Guinigundo said oversubscriptions in this week’s auction clearly show that “domestic liquidity remains ample.”
“Liquidity obviously derived from sustained reflow to the banks after the long holiday season and the sustained disbursement by the National Government including its infra(structure) executing departments,” he said.
Some analysts have said that domestic liquidity is getting tight as a result of the policy tightening of the BSP last year, which monetary officials have denied.
Guinigundo explained that “the market should understand that timing should be considered when observing monetary conditions.”
He said that “at the first instance, the market may appear low on liquidity after the BTr (Bureau of the Treasury) completes one funding exercise.”
He also pointed out that “proceeds of this (funding exercise) actually goes to the BSP as NG (national government) depository.”
“Once the NG starts to fund public disbursements as authorized by the DBM (Department of Budget and Management), the same liquidity goes back to the system and redeposited with the banks which, in turn, place them with the BSP, and hence the oversubscription, or lend it out,” he said.
The BSP official said “there will be more permanent reduction in system liquidity if the BSP starts selling FX (foreign exchange) to the market and keeps the proceeds.”
He, however, stressed that this will reflect “negative market sentiment and leading to some sustained capital outflow.”
“This is clearly not the case today,” he added. (PNA)
