TDF yields drop as BSP hints at August rate cut

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits continued to drop on Wednesday, even as the shorter tenor went undersubscribed, following signals of a potential rate cut next month.

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The central bank's term deposit facility (TDF) fetched bids amounting to just P88.578 billion on Wednesday, below the P100 billion placed on the auction block and the P144.309 billion for the same volume offered a week ago. As a result, the BSP awarded only P81.69 billion in term deposits.

Broken down, tenders for the seven-day papers reached only P31.69 billion, lower than the P50 billion auctioned off by the central bank and the P71.503 billion in bids for the same offer the previous week. The BSP accepted all the submitted tenders for the one-week tenor.

Accepted yields were from 5.23% to 5.265%, slightly narrower than the 5.23% to 5.2675% band seen a week ago. This caused the average rate of the one-week deposits to inch down by 0.47 basis point (bp) to 5.2521% from 5.2568% previously.

Meanwhile, bids for the 14-day term deposits amounted to P56.888 billion, higher than the P50-billion offering and the P72.806 billion in tenders for the same volume auctioned off a week prior. The central bank made a full P50-billion award of the two-week tenor.