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TDF rates rise across-the-board Wednesday

Rates of the Bangko Sentral ng Pilipinas’ (BSP) Term Deposit Facility (TDF) rose Wednesday although there was undersubscription for the seven-day tenor.

Data released by the central bank Wednesday showed that rate of the seven-day tenor rose to 3.0685 percent from 2.8164 percent during the auction last February 21.

BSP offered it for PHP50 billion but tenders only amounted to PHP43.751 billion, which was what was awarded for the day.

With the drop in bids came the same path for the bid coverage ratio, which this week ended at 0.8750 from last week’s 1.0674.

Rate of the 14-day facility increased to 3.0984 percent from last week’s 2.9798 percent.

Banks submitted a total of PHP44.497 billion worth of bids, higher than the PHP40 billion offering. The auction committee accepted all the bids.

The tenor’s bid coverage ratio also went down after it ended at 1.1124 from last week’s 1.1691.

Yield of the 28-day facility reached 3.1665 percent, up from 3.0258 percent in last week’s auction.

Tenders reached PHP28.879 billion, higher than the PHP20 billion offering but bid coverage ratio declined to 1.4440.

Monetary officials expect bids for the TDF facility to increase once the 1 percentage cut in bank’s Reserve Requirement Ratio (RRR) to 20 percent takes effect on March 2, 2018.

The RRR cut is seen to release some PHP90-billion liquidity into the system but monetary officials are not worried about the additional excess liquidity because it is expected to be placed back in the central bank through the TDF.

Joann Villanueva / PNA