First 2018 TDF auction draws P95.55B

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The Bangko Sentral ng Pilipinas’ liquidity-mopping term deposit facility (TDF) was oversubscribed during the first auction for the year, with bids for the P40 billion on offer hitting P95.55 billion.

The central bank made a full award and the yield fell 3.3654 percent from 3.3995 percent for the seven-day tenor, the sole remaining TDF offering after the Bangko Sentral stopped selling the 28-day note since December 20 amid tepid demand.

The central bank will continue to offer P40 billion of the seven-day tenor for next week’s auction.

“Careful liquidity forecasts” were cited by the BSP for the scrapping of the 28-day tenor, with officials noting that banks were preferring to lend instead of park funds with the central bank,


BSP Deputy Governor Diwa Guinigundo recently told reporters that banks want the central bank to offer a new TDF tenor.

“Based on our initial discussion with the banks — these are initial, preliminary discussions — they prefer a third tenor, probably a cross between seven and 28 days,” he said.

“Whatever that is, it is something [that will be]subject to discussion between BSP and the banks.”

The TDF is one of the liquidity-mopping tools introduced by the BSP following the adoption of the interest rate corridor in June 2016. It aims to improve the central bank’s influence on market rates and ultimately enhance monetary policy.

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