Bids at the Bangko Sentral ng Pilipinas’s (BSP) 28-day term deposit facility (TDF) proved lower than P100 billion, as banks and trust units prefer the short-dated TDFs instead.
Results posted on the BSP’s web site show the banks’ continued abhorrence for terms longer than a week, based on TDF subscriptions and the inordinate amount of interest the market showered on seven-day TDFs.
But despite the apparent bias, the BSP rejected plans of changing the volume of term deposits in both windows.
Central Bank Governor Amando M. Tetangco Jr. traced the continued preference of banks and trust entities for short-dated instruments to the anticipated adjustment in US monetary-policy stance this week.
“The auction results show banks’ continued preference to stay at the shorter end of the curve in anticipation of the US Fed [Federal Revenue] meeting this week, with the over subscription of the seven-day term deposits,” Tetangco told reporters.
“Demand for the 28-day term deposits, however, decreased due to the non-participation of trust units as the June 30 deadline nears. Overall system liquidity appears adequate,” he added.
In particular, the amount tendered for seven-day TDFs increased further to P64.74 billion on Wednesday, or 162 percent over the P40 billion offered this week.
In contrast, the 28-day TDFs drew lukewarm interest from subscribers whose aggregate offer totaled 68.3 percent of the P140 billion offered. Bids for the facility attracted P95.67
billion worth of tenders.
In terms of yield, the TDFs posted rates going in opposite direction, with the shorter tenor falling slightly during the week from 3.0978 percent to 3.0648 percent on Wednesday.
For the 28-day TDF, yield proved slightly higher than 3.4814 percent posted last week to 3.4882 percent on Wednesday.
The central bank kept the volume of term deposits at P40 billion for the seven-day TDF and at P140 billion for the 28-day TDF until June 14.
Tetangco further said the volume of TDF on offer remains appropriate for the country’s liquidity needs.
“There is a continuing review, but at this point in time the conclusion is that the amounts continue to be appropriate. But they can change in the future depending on the liquidity conditions in the system,” Tetangco said.