• BSP may consider higher TDF auction offer

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    The central bank on Wednesday said it might again consider hiking the volume offer for its term deposit facility (TDF) auction if the oversubscription trend continues.

    “If the trend of oversubscription continues then we might decide to increase. But that is not final yet. We will have to make an assessment–whether there will be a room or a need or there will be a need to adjust the auctions,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters on the sidelines of 13th Awards Ceremony and Appreciation Lunch for BSP Stakeholders held on Wednesday.

    Tetangco issued the statement after the oversubscription in the July 13 TDF auction wherein the BSP awarded P50-billion worth of its TDF—P10 billion in the seven-day tenor and P40 billion in the 28-day tenor—rejecting most of the nearly P200 billion tenders for the liquidity management tool under the Interest Rate Corridor.

    Of the total tenders, P55.04 billion was for the seven-day term deposit, and P140.77 billion for the 28-day term deposit—far exceeding the P10 billion and P40 billion set respectively for the auction.

    The offer was oversubscribed with the auction priced at an average of 2.5 percent for both tenors.

    “This continues to indicate that there is ample liquidity in the system and we are closely monitoring this,” Tetangco said.

    This will allow the BSP to better gauge the liquidity requirements, he said, which central bank will consider when it adjusts the auction amount.

    “Because the idea really is to adjust the auction amount as we go along with the implementation of the interest rate corridor,” he said.

    The latest auction level is also proof that the monetary conditions are supportive of economic growth without fueling inflation because the excess liquidity ends up in the central bank, he explained.

    “But if there is a need for funding from the private sector then that liquidity can always be accessed or availed of by the banks and then lend to the private sector,” Tetangco added.

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