Term deposit rates drop as market eyes BSP move

THE BANGKO SENTRAL ng Pilipinas’ (BSP) seven-day term deposits fetched a lower average rate on Wednesday as the offer was oversubscribed, with below-target November inflation bolstering bets on another rate cut this week.

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Bids for the centralbank’s term deposit facility (TDF) reached P156.981 billion on Wednesday, nearly double the P80 billion placed on the auction block and higher than the P135.643 billion in tenders for the same offer volume a week ago. The BSP made a full P80-billion award of the seven-day papers.

Accepted yields ranged from 4.52% to 4.724%, wider and lower than the 4.6% to 4.7408% band logged in the previous auction. With this, the average rate of the one-week deposits declined by 4.82 basis points (bps) to 4.6798% from 4.728% last week.

The BSP fully awarded its term deposit offering on strong demand, it said in a statement.

“Demand for the seven-day term deposit facility increased,” the central bank said. “The BSP maintained the offer volume at P80 billion, resulting in a bid-to-cover ratio of 1.96x.”

This was higher than the 1.7x bid-to-cover ratio seen the previous week.

The BSP did not offer the 14-day term deposits for a sixth auction in a row, as it last offered both the seven-day and 14-day papers on Oct. 29.