Yields on the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) showed little change at its Wednesday auction amid undersubscription.
The BSP said it accepted P32.985 billion worth of total tenders for the 7-day tenor, while it awarded P38.375 billion worth of tenders for the 14-day tenor.
This brought the amount of accepted total tenders to P71.360 billion, lower than the P117.295 billion tenders at the Aug. 13 auction.
The TDF offering this week was reduced to P100 billion from the P190-billion offering in the previous auction. This allotted P50 billion each for both tenors, following the decrease of the 7-day offering from P140 billion last week.
Interest rates for the 7-day TDF marginally increased by 0.33 basis point (bp), with its weighted average settling at 5.2557 percent. Conversely, the interest rates for the 14-day TDF dropped slightly by 0.66 bp as it settled at 5.2754 percent.
This narrowed the range of accepted yields for the 14-day tenor to between 5.2600 percent and 5.2899 percent, while it was unchanged for the 7-day tenor ranging between 5.2350 percent and 5.2700 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), attributed this mixed result as an aftermath of the government’s retail treasury bond (RTB) sale that breached P507.16 billion.
“The latest RTB offering effectively siphoned off some of the excess peso liquidity from the financial system and could have somewhat sapped future demand for Treasury bills, Treasury bonds, BSP TDF auction in the near term since some investors already invested beforehand,” said Ricafort in a Viber message.
Ricafort said another offsetting positive factor is the local monetary authorities’ dovish signal of another BSP rate cut as early as the Monetary Board meeting on Aug. 28.
