P180-B TDF auction undersubscribed

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The Bangko Sentral ng Pilipinas (BSP) said its P180 billion term deposit facility (TDF) again failed to draw enough subscription at Wednesday’s auction as the market preferred government securities.

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The central bank awarded just more than P140 billion.

The 28-day facility attracted P106.19 billion of bids, the same amount the BSP awarded compared to the weekly offer of P140 billion.

The seven-day tenor was also undersubscribed at P35.05 billion, prompting the BSP to award the same amount, compared to the P40 billion that was offered.

“TDF results continue to demonstrate that one, banks have been funding more loans and investment in government securities and two, short-dated placements are preferred by the market,” Bangko Sentral Deputy Governor Diwa Guinigundo said in a text message to reporters.

The interest rate for the seven-day facility rose to 3.3080 percent from 3.2597 percent while the yield for the 28-day tenor fell to 3.4929 percent from 3.4948 percent.

Guinigundo said the auction results were expected by the central bank. “Thus, we continue to assess various IRC [Interest Rate Corridor] features including the volume of weekly auction,” he added.

TDF is one of the liquidity-mopping tools introduced by the BSP following the adoption of the IRC 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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