Post-holiday liquidity drives TDF demand; rates down

Sustained high domestic liquidity situation in the country, especially after the Christmas holidays, continues to pull down  the demand for Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF).  

BSP data showed higher offerings, respectively, for the seven-day and 14-day TDF this week at P180 billion and P250 billion.

The figures are P10 billion and P20 billion higher than the offer volume for the one-week and two-week tenor, respectively, during the last auction on December 29, 2021.

The BSP auction committee made full awards for both tenors. Tenders for the one-week facility reached P280.34 billion, resulting in a bid coverage ratio of 1.5575. The average rate of this tenor declined to 1.7371% from 1.7428% in the previous auction. 

Total bids for the two-week TDF amounted to P451.889 billion, bringing the bid coverage ratio to 1.8076. This tenor’s average rate slipped to 1.7760% from the previous 1.8011%.  

In a statement, BSP Deputy Governor Francisco Dakila Jr. said results of the TDF auction this week “are in line with the expectation of normalization in cash demand as excess liquidity in the financial system gradually returns to the BSP’s deposit facilities.” 

“The higher demand for the longer tenor further supports the view that financial system liquidity is very ample. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” he added. (PNA)