TDF yields rise as investors shift
“We saw realignment by banks and trust departments, given results of the T-bond auction,” Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said. On Tuesday, the Bureau of Treasury rejected all bids for the re-issued five year T-bonds. File photo
MANILA, Philippines – Term deposits fetched higher rates yesterday as banks and trust entities shifted their funds after the Bureau of Treasury rejected all bids for Treasury bonds (T-bonds) the other day.
“We saw realignment by banks and trust departments, given results of the T-bond auction,” Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said. On Tuesday, the Bureau of Treasury rejected all bids for the re-issued five year T-bonds.
Term deposits continued to fetch higher yields due to the uncertainties brought about by the impending interest rate hike in the US and Trump’s win in last month’s election.
The seven-day term deposits fetched 2.914 percent from 2.6059 percent last week as accepted yield ranged between 2.5 and 3.1 percent while the yield of the 28-day term deposits soared to 3.1563 percent from last week’s 2.9557 percent as accepted yield ranged from 2.85 to 3.275 percent.
Bids for the seven-day term deposits yesterday reached P43.57 billion for a higher bid coverage ratio of 1.4523 while tenders for the 28-day term deposits amounted to P162.46 billion for a bid coverage ratio of 1.0831. Both tenors were undersubscribed during last week’s auction.
The BSP made a full award of P30 billion for the seven-day term deposits and P150 billion for the 28-day term deposits.
“We will likely continue to see refinements in placements in our facilities such as these. Our view remains that there is sufficient liquidity in the system. Nevertheless, we will continue to monitor bank requirements over the holidays,” Tetangco said.
Tetangco earlier said banks are opting to keep sufficient liquidity buffer ahead of the holiday season and at the same time trust entities are complying with the directive of the BSP to gradually reduce their exposures in the TDF and overnight deposit facility (ODF).
The central bank has ordered that all ODF and TDF placements of trusteed accounts and Unit Investment Trust Funds (UITFs) should be reduced to 50 percent by Dec. 31 this year and to 30 percent by March 31 next year on a per account basis for trusteed accounts and a per fund basis for UlTFs.
Furthermore, any remaining ODF and TDF placements should be terminated by June 30, 2017.
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