MANILA – The Bangko Sentral ng Pilipinas (BSP) slashed the term deposit facility (TDF) volume on Wednesday as it continued to observe low demand for the facility.
BSP Deputy Governor Francisco Dakila Jr. said in a statement that the central bank cut the TDF volume from PHP340 billion to PHP310 billion.
From the PHP180 billion and PHP160 billion allotted for the 7-day and 14-day tenors, respectively, the volume was slashed to PHP160 billion for the short-term facility and to PHP150 billion for the medium-term tenor.
“Total tenders reached PHP257.394 billion, which was lower than the BSP’s expected volume range,” Dakila said.
Due to undersubscription, the BSP awarded PHP123.856 billion for the 7-day TDF and PHP129.028 billion for the 14-day tenor.
TDF yields posted mixed results, with the shorter tenor fetching higher rates at 6.5871 percent, up by 0.2459 basis point. The 14-day tenor’s weighted average interest rate slightly fell by 0.8108 basis point to 6.6106 percent.
“The range of yields accepted in the 7-day and 14-day tenors widened to 6.5000 to 6.6120 percent and 6.4500 to 6.6400 percent, respectively,” Dakila said.
“Respective bid-to-cover ratios for the 7-day and 14-day tenors settled at 0.783 and 0.880, underscoring low demand as market participants tended to client withdrawals and loan releases,” he added.
Dakila assured the public that the BSP will remain guided by its assessment of prevailing liquidity conditions and market developments.
TDFs are used by central banks for liquidity management. Due to the BSP’s inability to issue its own debt instruments, the TDF will be tasked to withdraw a large part of the structural liquidity from the financial system to bring market rates closer to the BSP policy rate. (PNA)
