Banks and trust entities on Wednesday showed strong interest in the central bank’s short-term deposit offer, but remained reluctant to bid in the central bank’s longer-dated deposit window.
Latest data from the central bank’s term deposit facility (TDF) auction show the one-week TDF posting an oversubscription, in contrast to its 28-day counterpart that failed to generate the full amount the Bangko Sentral ng Pilipinas (BSP) anticipated.
In particular, the total amount tendered by banks and trust entities for the seven-day TDF hit P50.05 billion, or 125 percent of the P40 billion on offer.
The aggregate amount tendered for the 28-day TDF hit P103.33 billion, equal to only 73.8 percent of the P140 billion offered this week.
Also, the interest the banks and trust entities will earn from the deposit facilities contrasted sharply, with the one-week TDF posting a lower rate. In particular, the shorter-tenor averaged lower to 3.3241 percent, from 3.3327 percent a week earlier.
The 28-day tenor, meanwhile, averaged higher, to 3.4958 percent from 3.4936 percent. The BSP kept the volume deposit minimum unchanged at P40 billion for the seven-day TDF and P140 billion for the 28-day TDF. These volumes have been in place since May this year.
The BSP earlier expressed confidence on what is happening at the weekly auctions, saying everything was in line with expectations.
“This is, after all, expected by the BSP because we want the excess funds to be channeled to financing productive economic activities, including infrastructures,” a BSP official earlier said.
He quickly added the BSP will continue to assess the various features of the interest rate corridor, including the volume of the weekly auctions.
In July the deposit windows showed undersubscriptions, indicating the banks find investing in government securities to be rewarding.