Excess liquidity pushes TDF rates down anew


Banks have continued to place funds in the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF), which registered a lower interest rate this week as domestic liquidity remained high.

The rate of the seven-day TDF declined to 1.7083 percent from 1.7143 percent during the auction last Sept. 8.

The average rate of the 14-day facility slipped to 1.7423 percent from the previous week’s 1.7517 percent.

The BSP lowered the offer volume for both tenors this week and tenders remained higher than the offers.

It offered the seven-day facility for PHP150 billion from last week’s PHP160 billion, and tenders amounted to PHP216.55 billion. This was fully awarded.

The large volume of tenders for this tenor resulted in a bid coverage ratio of 1.443, higher than the 1.1960 last week when tenders amounted to PHP191.356 billion.

Tenders for the 14-day facility, which was also fully awarded, amounted to PHP391.113 billion. This was higher than the PHP360-billion offer.

Bid coverage ratio stood at 1.0864, higher than last week’s 1.0568 when the PHP400-billion offer was met with PHP422.712 billion worth of bids.

TDF is among the BSP’s excess liquidity-siphoning tools.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said TDF auction results for this week “continue to show strong interest from market participants for the BSP’s deposit facility amid sustained ample liquidity in the financial system.”

“Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” he said.

Source: Philippines News Agency