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Investor search for yield raises TDF rates

By on June 9, 2021 0

MANILA – Rates on the Bangko Sentral ng Pilipinas (BSP) Term Deposit Facility (TDF) edged up on Wednesday due to strong demand even as the volume supply for the 14-day facility was increased.

Data released by the central bank showed that the average seven-day TDF rate rose to 1.7582% and the 14-day rate to 1.7950%.

These were at 1.7200 percent for the one-week TDF and at 1.7860% at the June 2 auction.

The BSP maintained the offer for the seven-day facility at PHP 150 billion, but increased the volume of the 14-day facility from PHP 10 billion to PHP 370 billion.

Bids for the shorter-dated facility amounted to PHP 140.165 billion, resulting in a bid coverage ratio of 0.9344, lower than the 1.0570 the previous week when bids stood at PHP 158.544 billion. PHP.

The auction committee accepted all bids for this tenor this week.

In contrast, tenders for the 14-day TDF reached PHP 458.961 billion.

The auction committee awarded a full price.

The bid coverage ratio stood at 1.2404, higher than the previous week’s 1.1502, when bids reached PHP 414.061 billion.

In a statement, BSP deputy governor Francisco Dakila Jr. attributed the lower seven-day TDF bids “to market participants’ preference for a longer duration in their search for yield.”

“Nonetheless, market conditions remain normal, supported by the abundant and sustained liquidity of the financial system,” he said.

He added that the central bank “will continue to assess the latest liquidity conditions and market developments for its monetary operations”. (ANP)

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