BSP term deposit facility rates post mixed results

By Joann Villanueva | Philippine News Agency
May 10, 2023

MANILA – The rates of the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) moved to separate directions on Wednesday and both the seven- and 14-day facilities were undersubscribed despite lower offer volume.

The average rate of the seven-day TDF went down to 6.5882 percent from the 6.5952 percent during the auction last May 3.

On the other hand, the average rate of the two-week facility rose to 6.6166 percent from last week’s 6.6159 percent.

The BSP lowered the offer volume for the one-week TDF to PHP160 billion from last week’s PHP190 billion. Bids only amounted to PHP138.846 billion, which the auction committee fully accepted.

The 14-day facility was also offered for PHP100 billion from last week’s PHP140 billion.

This tenor is also undersubscribed after tenders only amounted to PHP88.912 billion. The auction committee accepted PHP88.712 billion worth of bids.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said bids offered during this week’s TDF auction “were slightly below the BSP’s expected volume range.”

Dakila said “range of yields accepted for the seven-day tenor shifted higher and narrowed to 6.5300-6.6400 percent, while that for the 14-day slightly widened to 6.4995-6.6700 percent.”

“Eligible counterparties tended to client requirements as there were no maturing BSP securities this week. Moreover, market participants may also be awaiting the results of the BSP’s monetary policy decision next week,” he said.

Central bank’s policy-making Monetary Board (MB) will have its third rate setting meeting for the year on May 18, and some economists forecast the board to hike by another 25 basis points the BSP’s key rates.

Dakila said the central bank’s “monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments.”