AN oversubscribed term deposit facility (TDF) auction on Wednesday indicates good demand from the market, but there is no need to recalibrate the policy tool so far, the central bank said.
The interest rate for the seven-day facility dropped to 2.99 percent from 3.00 percent, while the 28-day tenor fell to 3.38 percent from 3.39 percent.
The Bangko Sentral ng Pilipinas (BSP) fully awarded the P180-billion TDF offer. The total bids for the seven- and 28-day facilities exceeded P250 billion. Bids on the seven-day tenor totaled P45.93 billion, while the 28-day facility drew P209.41 billion.
The TDF attracted over P208 billion of bids last week.
“Good demand for short dated TDF placements continued to be seen, with tenders higher than last week and rates continuing to inch down,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.
The bid-to-cover ratio of 1.5313 and 1.3961 for the seven-day and 28-day tenors, rose from 1.2625 and 1.1420, respectively.
“Our market go-around suggests that the bid to cover ratio for 7 day tenor is higher ahead of the US FOMC [Federal Open Market Committee] meeting on March 15 to 16 and as some are preparing for corporate bond issuances in the pipeline this March (3 years to 7 years). They want to stay at shorter tenor,” Tetangco said.
He said the BSP will continue to monitor market liquidity preferences and use the information to assess the effectiveness of auction sizes.
“At the moment, however, we see no need to recalibrate the TDF,” he said.