TDF auction still undersubscribed


The Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) again failed to draw enough subscriptions during Wednesday’s auction despite the volume having been cut to P150 billion P180 billion.

The central bank awarded just over P124 billion.

The 28-day facility attracted P84.41 billion in bids, which were accepted by the BSP, compared to the offer size of P110 billion.

The seven-day tenor, meanwhile, fared better with bids totalling P42.91 billion, prompting the BSP to award the P40 billion that was offered.

“The reduction in the 28-day TDF volume has just been introduced. Banks must have earlier deployed their funds somewhere else,” central bank Deputy Governor Diwa Guinigundo said in a text message to reporters.

The rate for the seven-day facility rose to 3.3334 percent from 3.3162 percent while that for the 28-day tenor slipped to 3.4910 percent from 3.4961 percent.

“[T]he point is that the weighted average interest rate for this [28-day] tenor declined… We expect TDF rates to be moving closer with the BSP policy rate rather than bumping into the overnight lending rate over time,” Guinigundo said.

“That would signal better transmission of monetary policy,” he added.

Rates for the central bank’s overnight reverse repurchase and overnight lending facilities currently stand at 3 percent and 3.5 percent, respectively.

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


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