TDF rates decline

Bangko Sentral ng Pilipinas on Friday declined to comment on the arrest of former Foreign Affairs Secretary and Banco Filipino Savings and Mortgages Bank director Perfecto Yasay Jr. ABS-CBN NEWS
Bangko Sentral ng Pilipinas on Friday declined to comment on the arrest of former Foreign Affairs Secretary and Banco Filipino Savings and Mortgages Bank director Perfecto Yasay Jr. ABS-CBN NEWS

MANILA – Rates of the Bangko Sentral ng Pilipinas (BSP) term facilities declined across-the-board Wednesday ahead of the implementation of additional cut in banks’ reserve requirement ratio (RRR).

Data released by the central bank showed that the average rate of the seven-day facility eased to 4.2264 percent from 4.2348 percent during the term deposit facility (TDF) auction last Oct. 9.

BSP offered this tenor for P30 billion and received tenders amounting to P39.185 billion.
This resulted in the rise of the bid coverage ratio to 1.3062 from 1.2877 last week when the P30-billion offer received P38.63 billion worth of tenders.

The rate of the 14-day facility declined to 4.2348 percent from last week’s 4.2485 percent.

Banks submitted P35.52 billion worth of bids, higher than the P30-billion offer but lower than the P43.38-billion tenders in last week’s auction.

The bid coverage ratio slipped to 1.1840 from 1.4460 last week.

The rate of the 28-day facility went down to 4.2227 percent from 4.2754 percent in the previous auction.

Its bid coverage ratio settled at 1.3268 down from last week’s 1.6384.

This was after the P30-billion offer was met with P39.805 billion tenders.

This week’s offer for this tenor is higher compared to the P20 billion last week but the bid coverage ratio declined since tenders last week totaled to P32.767 billion.

BSP assistant governor Illuminada Sicat said the outcome of the TDF auction this week “reflected in part banks’ preference to place their funds in the BSP’s deposit facilities ahead of the implementation of the reduction in reserve requirements on Nov. 1 (as announced on Sept. 27, 2019) and the increase in available liquidity in the financial system owing to higher disbursements by the national government.”

BSP’s policy-making Monetary Board (MB), during its meeting last Sept. 27, decided to cut further banks’ RRR by 100 basis points as part of the central bank’s financial reform agenda.

The latest slash is on top of the total of 200 basis points implemented on a staggered basis last May to July, which is also aimed at bringing down the RRR level to make it at par with those of other central banks in the region.

“At the same time, the adjustment in reserve requirement ratios is aimed at increasing domestic liquidity in support of credit activity,” the BSP earlier said. (PNA)

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