Term deposit yields dip on BSP, Fed easing bets

THE BANGKO SENTRAL ng Pilipinas’ (BSP) term deposits continued to fetch lower yields on Wednesday on bets of further monetary easing here and in the United States.

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Bids for the central bank’s term deposit facility (TDF) amounted to P108.193 billion, above the P90 billion placed on the auction block and the P105.104 billion in bids for a P100-billion offer volume a week ago. The BSP made a full award of its offer.

Broken down, the seven-day deposits attracted P53.515 billion in bids, higher than the P40-billion offer but below the P58.145 billion seen for the same offer volume last week.

Accepted rates for the one-week securities were from 5.05% to 5.09%, narrower than the 5.03% to 5.11% margin a week earlier. With this, the weighted average accepted yield for the seven-day tenor declined by 0.81 basis point (bp) to 5.0747% from 5.0828% last week.

Meanwhile, tenders for the 14-day papers reached P54.678 billion, more than the P50-billion placed on the auction block and the P46.959 billion in bids recorded for the P60-billion offer last week.

The BSP accepted bids carrying yields ranging from 5% to 5.14%, wider and lower than the 5.05% to 5.15% band last week. As a result, the average rate of the two-week tenor slipped by 0.4 bp to 5.1074% from 5.1114% previously.

The BSP has not auctioned off 28-day term deposits for nearly five years to give way to its weekly offerings of securities with the same tenor.

Both the TDF and BSP bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates towards the policy rate.