BSP's weekly TDF auction oversubscribed anew

The central bank's P30-billion term deposit auction on Wednesday was oversubscribed anew, the bids by banks and trust companies surpassing the weekly volume for the third consecutive week.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the P10-billion, seven-day deposit reaped P69.632 billion in bids at a weighted average of 2.5 percent in accepted yield.

The bids for the 28-day term deposit facility (TDF) totaled P95.317 billion, compared with P20 billion on offer, also at yield rate of 2.5 percent.

The TDF is a central bank tool to actively manage liquidity or money in the financial system. Under the facility, banks and trust entities may bid for the interest rates which the BSP will pay for them to park their excess funds for seven or 28 days in the BSP vaults.

The 30-minute auction is held once a week at 09:20 a.m. with a minimum placement of P10 million.

In a separate advisory posted on its website, the central bank said it will be offering more during its first auction in the third quarter on July 6.

While it will offer P10 billion for the seven-day facility, it will raise the offer for the 28-day tenor to P40 billion.

"This is part of the refinement of the auction as we see the market becoming more familiar with the system," BSP Governor Amando M. Tetangco Jr. said in a text message to reporters on Wednesday.

"This is also part of the discipline of the process. We will make further changes to the volume as necessary to help make the TDF more reflective of market conditions," he added.

Even with the higher offer in the next quarter, the auction is expected to be oversubscribed.

"[T]here is excess cash," Alvin Ang, economics professor at the Ateneo de Manila University, said in another text message.

The BSP will offer P10 billion for the seven-day tenor and P20 billion for the 28-day tenor during next week's auction on June 29. – VDS, GMA News