Demand for TDF remains strong – Tetangco

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THE Bangko Sentral ng Pilipinas (BSP) on Wednesday said term deposit facility (TDF) continues to attract strong demand.

Out of the P180-billion offer, BSP awarded P151.128 billion during the auction on Wednesday.
The seven-day tenor was oversubscribed at P68.564 billion, prompting the BSP to fully award the P40-billion offer.

But the 28-day TDF was undersubscribed, attracting only P111.128 billion of bids. The BSP awarded only P111.128 billion against the weekly offer of P140 billion.

But the results showed there is ample liquidity in the financial system.


“That means there continues to be sufficient liquidity in the system, particularly for the seven-day tenor which was oversubscribed again. There continues to be strong interest in short end of the curve,” BSP Governor Amando Tetangco Jr. told reporters on the sidelines of the FINEX testimonial luncheon for him.

“On the 28 days, the interest rate was basically flat relative to last week. And I think it was also under subscribed again. Factors behind this would be the unwinding by the trust departments of their placements in the TDF. Increased lending by the banks with their corporate clients and also there were prior issues. Some of the funds went to those issues as well,” Tetangco said.

“But overall … there is adequate liquidity. But we will continue to monitor this and see if there’ll be a need to adjust at some point. But right now, the amounts are still appropriate,” he added.

The TDF is among the central bank’s liquidity management tools under the interest rate corridor system.
The seven-day TDF received bids totaling P68.564 billion, while the 28-day TDF received P111.128 billion worth of bids, at an average yield rate of 3.1918 percent and 3.4760 percent, respectively.

The interest rate for the seven-day facility declined to 3.1918 percent from 3.2468 percent, and the interest rate for the 28-day tenor slipped to 3.4760 percent from 3.4764 percent.

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