The special deposit windows of the Bangko Sentral ng Pilipinas (BSP) failed to attract the full amount the monetary authorities had in mind for them.
On Wednesday the BSP reported an undersubsciption in the facilities as banks and trust units weighed events from around the world and their impact on liquidity
movements.
Data show the seven-day term-deposit facility (TDF) on Wednesday as undersubscribed after last week’s oversubscription. The 28-day TDF similarly remained undersubscribed for six months in a row already.
The amount offered for the seven-day TDF totaled only P37.83 billion, covering 94.6 percent of the P40 billion on this week. This was also lower compared to last week’s P42.92-billion tenders.
For the 28-day TDF, tenders aggregated only P101.44 billion or only 92.2 percent of the total P110-billion offering. Although this was an undersubscription, these were higher than last week’s tenders of only P84.42 billion.
TDF rates rose during the week.
The seven-day TDF rate increased, from 3.3334 percent last week to 3.3484 percent this week. The 28-day TDF rate rose to 3.495 percent, from 3.491 percent last week.
Deputy BSP Governor for the monetary stability sector, Diwa C. Guinigundo, said while the shorter tenors were undersubscribed, market conditions remained “very fluid”.
“I believe the market still prefers short tenors, although with the probability of a US Federal funds-rate increase diminishing this year, some segments may test longer than seven days. Once the [national government] issues bonds in a bigger way to support higher public spending on infrastructure, market appetite is bound to change,” Guinigundo added.
“What is important at this point is that the interest-rate dynamics is broadly steady [and] interest-rate volatility remains manageable. [It] takes a longer time series to really establish a firmer trend,” he added.
Just last month the BSP reduced the volume of its 28-day offering to address persistent undersubscription in the facility. The BSP scaled down the offering to P110 billion, from P140 billion.
The tenor has consistently attracted below-target offers since the March 22 auction.