Demand back for 7-day tenor in TDF auction

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The Bangko Sentral’s P180-billion term deposit facility (TDF) failed to draw enough bids during Wednesday’s auction, with just over P160 billion awarded even as the seven-day tenor was oversubscribed.

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Just P122.26 billion in bids was received for the P140-billion, 28-day TDF and the BSP decided to accept all offers.

The seven-day tenor, on the other hand, snapped two consecutive weeks of undersubscription and the BSP awarded the entire P40 billion as bids reached P52.57 billion.

“It looks like the markets are flocking back to the TDF as the yield curve has swung back down, especially for the
shorter tenors and making the TDF attractive,” Metropolitan Bank & Trust Co. Research head Marc Bautista said.

The interest rate for the seven-day facility rose to 3.3345 percent from 3.3080 percent while that for the 28-day tenor rose to 3.4949 percent from 3.4929 percent.

The TDF is one of the liquidity-mopping tools introduced by the Bangko Sentral following the adoption of the interest rate corridor system in June 2016. The facility aims to develop an active and more dynamic policy tool to improve BSP’s influence on market rates and ultimately enhance monetary policy.

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