Oliver 22 0 0 3 min to read

TDF yields follow the rise in policy rates set by the central bank.

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Despite Wednesday’s increase in yields, demand for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) remained high.

During the auction on December 14 of last year, the seven-day facility’s average rate increased to 6.2466 percent from 6.1395 percent.

The 14-day TDF’s average rate jumped from 6.2471 percent last week to 6.3323 percent this week.

Both tenors’ offer volumes were reduced by the BSP, and tenders outperformed the offering.

The total amount of bids for the seven-day facility was PHP179.272 billion, above the PHP150 billion offer, which was reduced from PHP160 billion last week.

The auction committee gave out the entire prize.

The two-week TDF received more bids—PHP147.112 billion—than the previous week’s PHP160 billion offer of PHP110 billion. This tenor also received its full award.

BSP Deputy Governor Francisco Dakila Jr. stated in a statement that the TDF auction bids this week are “greater than the BSP’s estimated volume range.”

The approved range for yields, according to him, “continued to climb higher but tightened to a range of 6.0000-6.3500 percent in the seven-day TDF and 6.0000- 6.4875 percent in the 14-day TDF.”

He referred to the 50 basis point rise in the key policy rate of the central bank and stated, “The results of the TDF auction reflect the partial pass-through of the BSP policy rate hike last week despite sufficient liquidity in the financial sector.”

The BSP’s key interest rates were raised as the monetary authorities predicted that inflation would continue high in the upcoming months.

In the future, the BSP’s monetary operations would continue to be directed by its evaluation of the most recent market developments and liquidity conditions, said Dakila.

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