The P280 billion offered by the Bangko Sentral ng Pilipinas in its weekly term deposit facility auction on Wednesday was oversubscribed as investors anticipate further rate hike this week.
The BSP reduced the volume offering for the TDF auction to P280 billion from P340 billion. Based on actual bids received last week, the total offer volume was reallocated between the 7-day and 14-day tenors at P180 billion (from P220 billion) and P100 billion (from P120 billion), respectively.
Total tenders received reached P282.800 billion, which was within the BSP’s expected volume range. The respective bid-to-cover ratios for the 7-day and 14-day TDF stood at 0.936x and 1.144x.
Data showed that of the total bids received, the BSP accepted P266.048 billion. The BSP awarded P166.048 billion (from P168.448 billion in bids) in the 7-day tenor and accepted P100 billion (from P114.352 billion in bids) in the 14-day tenor.
The resulting weighted average interest rates for the awarded bids went up from the previous week. The WAIR for the 7-day TDF rose by 6.1474 basis points to 6.6152 percent whereas that for the 14-day TDF rose by 3.3328 bps to 6.6390 percent.
The range of yields accepted for the 7-day tenor shifted higher and narrowed to 6.4900-6.7700 percent, while that for the 14-day also shifted higher and narrowed to 6.0000-6.6994 percent.
“The results of the TDF auction fell within expectations and came in anticipation of the BSP’s monetary policy meeting on March 23 and the Holy Week holidays. Market participants also tended to client requirements,” the BSP said in a statement.
“Moving forward, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” it said.
Analysts expect the BSP to raise the policy rate on Thursday by another 25 basis points to 6.25 percent to rein in inflation that blew past the target range last year.