NextGen Day

On Wednesday, the rates for the term deposit facility (TDF) offered by the Bangko Sentral ng Pilipinas (BSP) changed in different directions, and despite decreased offer volumes, both the seven- and 14-day facilities had low demand.

During the auction on May 3 of last year, the seven-day TDF’s average rate decreased from 6.5952 percent to 6.5882 percent.

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

The BSP reduced the offer volume for the one-week TDF from last week’s PHP190 billion to PHP160 billion. Only PHP138.846 billion in bids were received, which was fully accepted by the auction committee.

In addition, a 14-day facility was made available for PHP100 billion as opposed to PHP140 billion last week.

This tenor is likewise undersubscribed, with only PHP88.912 billion in tenders received. The auction committee accepted offers totaling PHP88.712 billion.

The TDF auction this week’s bids, according to a statement from BSP Deputy Governor Francisco Dakila Jr., “were slightly below the BSP’s expected volume range.”

According to Dakila, the “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.”

Since there were no BSP securities coming due this week, eligible counterparties attended to customer needs. Additionally, he added, market participants might be anticipating the outcome of the BSP’s monetary policy decision next week.

On May 18, the Monetary Board (MB), which sets policy at the central bank, will hold its third rate-setting meeting of the year. According to some economists, the board will likely raise the BSP’s benchmark rates by an additional 25 basis points.

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

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