Tight market liquidity affects TDF auction

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Bids for the central bank term deposit facility (TDF) fell short of the weekly offering, because of tight liquidity, an analyst said Wednesday.

Out of the P180 billion offer, the Bangko Sentral ng Pilipinas (BSP) awarded P149 billion.

The seven-day tenor was oversubscribed at P65.46 billion, prompting the BSP to fully award the P40 billion offer.

But the 28-day TDF was undersubscribed anew, attracting only P105.33 billion. The BSP awarded only P105.33 billion, compared to the weekly offer of P140 billion.


ING Bank Manila senior economist Joey Cuyegkeng said the undersubscription indicates relative tightness which also affects short-term interest rates.

The interest rate for the seven-day facility declined to 3.1384 percent from 3.1918 percent, while the 28-day yield rate slipped at 3.4610 percent from 3.4760 percent.

“Successful RTB [retail treasury bonds]issuance together with income tax season moderated liquidity growth and kept markets relatively tight,” Cuyegkeng noted.

The Bureau of Treasury sold P181 billion three-year RTBs, or more than six times the P30 billion on offer.

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