TDF bids exceeds P328.68 billion

The 7-day term deposit facility (TDF) auction attracted bigger tenders this week of P328.68 billion while the average yield fell to 2.2510 percent versus the previous week’s 2.2516 percent.

The Bangko Sentral ng Pilipinas (BSP) offered P170 billion TDF this week – still a lone tenor – compared to P150 billion last May 27.

BSP Governor Benjamin E. Diokno has made sure that the financial market will have the liquidity it will require during the COVID-19 health crisis, and the decision to offer just the 7-day TDF is to better manage the liquidity condition.

“Monetary actions taken by the BSP are estimated to have made available some P1.1 trillion in additional liquidity,” Diokno told roundtable talks organized by Bloomberg.

The suspension of the 14- and 28-day TDF is one of these monetary actions, as well as in the reduction of its offering of overnight RRP. The 14- and 28-day TDF was last bidded on March 18.

BSP actions also includes the 125 basis points (bps) reduction in interest rates and the 200 bps cut in the reserve requirement ratio which released about P225 billion. The central bank also entered into a repurchase agreement with the Bureau of the Treasury to buy P300-billion government securities and has also been buying debt papers in the secondary market.

This week’s TDF auction attracted more bids compared to last week’s P273.75 billion.

The BSP’s decision to temporarily cancel certain TDF tenors is part of their COVID-19 pandemic response measures.

The BSP said it will resume the other two tenors’ activity if the market demands it and it will be based on their liquidity forecasting method.


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