BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said the high oversubscription in term deposit auctions may prompt the bank regulator to increase the weekly volume from the current P50 billion.
“We will make an assessment. If the oversubscription continues, then we might increase but that is not final. We will have to make an assessment first whether there will be a need to adjust,” Tetangco said at the sidelines of an awarding ceremony.
The sixth term deposit auction Wednesday was highly oversubscribed. Data posted on the Bangko Sentral website showed that the P10 billion offered with a seven-day tenor attracted total tenders of P55.04 billion, while the 28-day P40 billion auction received total bids of P140.77 billion.
Both tenors fetched a weighted average accepted yield of 2.5 percent, matching the floor rate in the deposit facility.
“This continues to indicate that there is ample liquidity in the system and we are closely monitoring this because this will allow us to better gauge the liquidity requirements and we will consider that when we adjust the volume,” Tetangco said.
He said the liquidity was a proof that monetary conditions were supportive of economic growth. Tetangco also said the Bangko Sentral might consider lowering the reserve requirement of banks.
The term deposit facility is Bangko Sentral’s latest tool to siphon off excess liquidity in the financial system.
The first TDF auction on June 8 attracted 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 drew 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. Meanwhile, 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, fourth and fifth auctions were likewise oversubscribed.
On July 7, Bangko Sentral increased the weekly volume of the auction to P50 billion from the previous P30 billion to be more effective in siphoning off excess money in the system.
ING Bank Manila senior economist Joey Cuyegkeng said the earlier P30 billion weekly auctions had been oversubscribed by more than five times, which was an “indication of system’s liquidity.”
As part of the reforms in the monetary operations, Bangko Sentral transformed the RRP facility to a purely overnight facility, using a fixed-rate and full allotment method.