BSP to offer P30B for June 15 TDF auction


The central bank said it would offer P30 billion for the second auction for its Term Deposit Facility (TDF). TDF is part of Bangko Sentral ng Pilipinas’ (BSP) liquidity management under the Interest Rate Corridor (IRC) System.

In an advisory, the BSP said the second TDF auction is scheduled for June 15. Of the P30 billion total volume offering, P10 billion is for a 7-day tenor, while P20 billion is for a 28-day tenor.

The window time for TDF auction is 30 minutes starting at 10 a.m. with a minimum bid amount of P10 million, and a maximum bid amount of 20 percent of the auction size per tenor.

The TDF is a key liquidity absorption facility, commonly 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,” the BSP said.

The BSP will initially offer two tenors—seven days and 28 days—in its term deposit auction.

“The possibility of offering longer tenors can be considered in the future, depending on the liquidity needs and preferences of the market,” it added.

Pre-termination is prohibited for 7-day tenor, while pre-termination is allowed for 28-day tenor with a 7-day holding period at the appropriate pre-termination rate.

The TDF auction will be operated using a variable-rate, multiple-price tender or English auction.

TDF is one of the facilities under the IRC, which is a system for guiding short-term market rates toward the central bank’s policy interest rate, which is the overnight reverse repurchase (RRP) rate.

Staring today (Friday), headline rate will be adjusted to 3 percent from the current 4 percent.


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