MANILA – Oversubscription was again registered during the term deposit facility (TDF) auction Wednesday but rate of the facility declined, which was traced to the latest Bangko Sentral ng Pilipinas’ (BSP) rate cut.
Data released by the central bank showed that the average rate of the seven-day facility slipped to 1.7479 percent from 1.9813 percent during the auction last Nov. 18.
The rate of the 14-day TDF also contracted to 1.7326 percent from last week’s 1.9984 percent.
Both tenors were fully awarded at PHP170 billion and PHP290 billion for the seven- and 14-day facility, respectively.
The bid coverage ratio of the seven-day facility went down to 1.1384 from the 1.2150 last week after tenders for this week’s auction reached PHP193.53 billion.
Tenders for this tenor in this week’s auction are relatively lower compared to the PHP230.855 billion worth of bids in last week’s auction. This facility was offered for PHP190 billion last week.
Bids for the 14-day facility amounted to PHP408.5 billion, resulting in a bid coverage ratio of 1.4086.
This tenor’s bid coverage ratio this week is better than last week’s 1.3378 when this tenor was offered for PHP310 billion and tenders reached PHP414.73 billion.
In a statement, BSP Deputy Governor Francisco Dakila Jr. traced the drop in the TDF’s interest rates to the 25 basis points reduction in the central bank’s key policy rates that took effect last Friday.
He said the amounts of bids in this week’s auction “show ample financial system liquidity as market participants continued to prefer the longer tenor.”
“Moving forward, the BSP’s monetary operations will remain guided by its assessment of market developments and liquidity conditions,” he added. (PNA)
