Treasury retail bond sale hits TDF auction


THE P180-billion term deposit facility (TDF) auction failed to draw enough bids for the 28-day tenor, but the shorter tenor attracted more than the P30-billion offer, the central bank said.

The Bangko Sentral ng Pilipinas (BSP) awarded more than P156 billion during the Wednesday auction, short of the total P180-billion offer.

“The auction results of lower subscriptions and slightly higher rates are as expected, given the availability of fresh supply from the national government in terms of the RTBs [retail treasury bonds],” BSP Governor Amando Tetangco Jr., said in a text message to reporters.

Bids reached P36.16 billion for the 7-day tenor, prompting the BSP to fully award the weekly offer of P30 billion.
Bids for the 28-day facility totaled only P120.75 billion, short of the P150-billion offer. The BSP awarded P120.50 billion.

The interest rate for the seven-day facility rose to 2.9970 percent from 2.9896 percent while the 28-day tenor rose to 3.3746 percent from 3.3028 percent.

Banks are still looking toward shorter dated instruments, and, as expected, will try to squeeze as much yield from alternative investment outlets, he said.

The national government was able to raise P70 billion at its price setting auction for three-year RTBs on
Tuesday, in line with the aim to promote financial literacy and inclusion.

Noting that the latest TDF results were all part of market dynamics, Tetangco noted the weekly TDF volume does not warrant any change at this point.

“We’ll be monitoring liquidity levels against our forecast liquidity path. I think it’s important to provide some stability in the auction facilities of the BSP,” he added.

Tetangco said the ultimate game plan of the monetary authority is for banks to lend to the market for long-term projects that will generate employment and increase wealth.

“The TDF is here to help steer interest rates and not to be an investment outlet,” he said.

BSP Deputy Governor Diwa Guinigundo said the market is anticipating further adjustments in the US Fed interest rate. So, longer dated instruments are less preferred over the shorter dated TDFs.

“Funds also went to the RTBs, which fetched very attractive yields and, as a result, the market went for the seven-day TDFs for more flexible positioning,” he said.


Please follow our commenting guidelines.

Comments are closed.