The maiden sale on Wednesday of the 14-day term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) erased all doubts that such an intermediate tool has a strong appeal among financial institutions with plenty of liquidity to spare.
Data from the BSP showed the banks’ strong interest in the 14-day TDF whose maiden sale was swamped by an oversubscription aggregating P45.46 billion.
This was more than double the amount offered for the instrument in which the BSP was prepared to offer only an initial P20 billion.
The high demand for the intermediate term deposit compelled the BSP to upsize the volume offering at next week’s sale to P40 billion instead.
The two other special deposit facilities also reported oversubscriptions on Wednesday.
In particular, the longer-term 28-day TDF attracted offers totaling P39.935 billion that exceeded the P20 billion on offer on Wednesday.
The BSP previously zeroed out or withheld the offering of the 28-day TDF on account of low demand during the Christmas holidays. The monetary authorities restarted the 28-day offering only just last week, when tenors were also oversubscribed.
For the seven-day TDF, tenders aggregated P65.36 billion that exceeded the P40 billion on offer on Wednesday.
This convinced the BSP similarly to upsize the volume offering for the seven-day TDF, from P40 billion to P50 billion starting next week.
As for the 28-day TDF, the offered volume was unchanged at P20 billion.
The rates for both the seven- and 28-day TDFs retreated given the high demand, with the seven-day facility attracting a rate of 2.7232 percent, from 2.7278 percent, last week.
The 28-day facility fetched a rate of 2.965 percent this week, from 3.0183 percent last week.
The maiden 14-day TDF fetched a rate of 2.8737 percent.
Their collective sale each week allows the BSP to gain more control over liquidity levels in the financial system with the least disruption on forces at work in the financial markets.