BANKS and trust firms swarmed the week-long term deposit facility (TDF) offered by the Bangko Sentral ng Pilipinas (BSP) on Wednesday as yields declined.

Banks wanted to place as much as P119.582 billion under the TDF yesterday, nearly three times larger than the P40 billion the BSP had placed on the auction bloc.

The bids were, however, lower than the P125.564-billion offers received last week.

The banks accepted an average yield of 2.9256% on the seven-day instruments, lower than the 3.028% fetched during the Jan. 17 auction.

Banks sought returns between 2.75% and 2.989%, according to the central bank.

The TDF is currently the central bank’s main tool to mop up excess liquidity in the financial system. Under the facility, banks and trust entities bid for the interest rates which the BSP will pay for them to place their excess funds under that window.

Central bank officials have yet to respond as of press time when sought for comment on the auction results.

The BSP stopped offering 28-day term deposits on Dec. 20 as market players preferred the shorter instrument over the Christmas season, which seasonally sees stronger demand for cash among depositors.

BSP Deputy Governor Diwa C. Guinigundo has said they will consider restoring the 28-day tenor in due time and possibly offer a new term which would be longer than a week but shorter than a month, in response to market demand.

For the Jan. 31 auction next week, the BSP will place another P40 billion on the auction bloc for the seven-day deposit facility. — Elijah Joseph C. Tubayan