THE fourth term deposit facility auction of the Bangko Sentral ng Pilipinas remained highly oversubscribed on Wednesday, an indication of excess liquidity in the country’s financial system.
Data posted on the Bangko Sentral website showed total bids for the P10-billion seven-day tenor term deposits attracted P61.303 billion, while the P20 billion offered with a month-long tenor generated total tenders of P91.955 billion, or more than four times oversubscribed.
Both tenors fetched a weighted average accepted yield of 2.5 percent that matched the floor rate in the overnight deposit facility.
The term deposit facility is the Bangko Sentral’s latest tool to siphon off excess money in the financial system.
The first TDF auction on June 8 drew much interest from banks and trust entities. The P10 billion offered under the 7-day tenor generated total bids of P82.438 billion, while the P20 billion auctioned under the 28-day tenor attracted total tenders of P117.271 billion. Both tenors fetched a 2.5-percent weighted average yield.
The second auction on June 15 was also highly oversubscribed. Total bids for the P10-billion offered for the week-long tenor reached P63.937 billion, or more than six times oversubscribed. Total tenders for the P20 billion offered for the month-long tenor stood at P92.847 billion, or more than four times oversubscribed. Both tenors fetched a weighted average accepted yield of 2.5 percent that matched the floor rate in the overnight deposit facility.
The third auction on June 22 was also oversubscribed.
Bangko Sentral Deputy Governor Diwa Guinigundo said last week it was possible to increase the volume and even frequency of the term deposit auctions if the need arose in the future.
“We will move whenever it is necessary in terms of volume and frequency. But right now we don’t see the need to increase or adjust the volume of offering or increase the frequency from once a week to twice a week,” Guinigundo said in an interview.
“I think we are in a stable situation that does not require any dramatic adjustment in the volume as well as the frequency of the TDF,” he said.
However, Guinigundo said the Bangko Sentral was not yet getting the desired outcome of the present auctions in their initial stages.
He said Bangko Sentral was doing it gradually and slowly so as not to shock the market.
He said even the market itself was doing the adjustment so it was more prudent to go slow. He said that view was expressed in terms of the gradual increase in terms of the volume that the Bangko Sentral offered in the term deposit facility.
Starting July 6, Bangko Sentral will increase to P50 billion from P30 billion the volume of deposits to be offered every week to banks and trust entities in the term deposit facility auction to be more effective in siphoning off excess liquidity in the financial system.
In an earlier notice posted on its web site, the Bangko Sentral said of the P50 billion weekly volume, seven-day tenor deposits would still account for P10 billion. But there will be a significant increase in the 28-day tenor deposits to P40 billion from the previous P20 billion.
