TDF rates fall across-the-board

By Joann Villanueva

 

MANILA — The latest cut in the Bangko Sentral ng Pilipinas’ (BSP) key rates resulted in the same outcome for the term deposit facility (TDF) Wednesday.

Rate of the eight-day facility, which is a day longer given the holiday on August 21, declined to 4.4389 percent from 4.5844 percent during the auction last August 7.

The central bank offered it for PHP40 billion, but banks submitted PHP51.252 billion worth of tenders. The auction committee made a full award.

The facility’s bid coverage ratio, however, rose to 1.2813 from 1.2396 last week.

Average rate of the 14-day facility slipped to 4.4905 percent from 4.6176 percent last week.

Tenders reached PHP40.747 billion, higher than the PHP30-billion offer, which was fully awarded.

Bid coverage ratio also went down after it ended the day at 1.3502 from 1.4809 in the previous week’s auction.

Also, rate of the 28-day facility declined to 4.4961 percent from 4.6033 percent in the previous auction.

It was offered for PHP30 billion but tenders reached PHP45.142 billion. The auction committee awarded PHP30 billion.

Bid coverage ratio went down to 1.5047 from last week’s 2.0900.

In an answer to queries on the TDF results this week, the central bank attributed the drop in rates to the 25 basis points cut in the BSP’s key rates during the meeting of the policy-making Monetary Board (MB) last August 8.

This is the second reduction for the BSP rates this year after the same cut last May.

BSP Governor Benjamin Diokno, who chairs the MB, said they decided to reduce anew the central bank’s key rates since inflation continues to decelerate while domestic growth remains firm.

The BSP statement also cited the submission of the strong bids during the auction.

“The results of today’s auction reflected ample market liquidity coming from the higher National Government (NG) disbursements and 200-bps reduction in the reserve requirement ratio between May and July,” it added. (PNA)

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