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TDF rates lower this week

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By Lee C. Chipongian

Yields of the central bank’s weekly term deposit facility (TDF) fell this week ahead of Thursday’s Monetary Board policy meeting, but bids swamped the only two tenors auctioned.

Bangko Sentral ng Pilipinas (BSP) logo

The 7-day TDF, offered at P10 billion, attracted tenders of P20.26 billion, more than the previous week’s P10.77 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The average rate was higher at 4.6278 percent from last June 13’s 4.6661 percent. The 14-day tenor, also offered at P10 billion, had bids of P20.58 billion compared to last week’s P7.42 billion. Yields were down at 4.7107 percent from 7.848 percent. The 28-day TDF is not offered this week.

The BSP offered only P20 billion on Wednesday versus P30 billion last week. Previous to this, the BSP was offering P40 billion since May 15.

There is additional liquidity in the financial system after the BSP cut reserve requirement ratio (RRR) last May 31, the first of three stages of reduction or until July 26.

The 100 basis points (bps) RRR cut released about P90-95 billion liquidity from the big banks. Thrift and rural banks’ RRR were also slashed by 100 bps each at the end of May, releasing about P8-9 billion fresh funds from thrift banks, and about P1.8 billion from rural banks.

The fresh liquidity could be placed in the BSP’s TDF, or the BSP could issue its own bonds which it was now allowed to under its amended BSP Charter.

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