Term deposit rates mixed

MANILA, Philippines -  The yield of the seven-day term deposits fell below three percent while that of the 28-day term deposits inched up as yesterday’s auction showed mixed results.

The seven-day term deposits fetched a lower rate of 2.9904 percent during yesterday’s term deposit facility (TDF) auction from 3.0648 percent last week as accepted yield ranged between 2.9 and 3.0495 percent.

On the other hand, the yield of the 28-day term deposits inched up to 3.4889 percent from last week’s 3.4882 percent as accepted rates ranged from 3.4 to 3.5 percent.

The short-dated term deposits attracted P78.33 billion in bids or almost double the issue size of P40 billion, translating to a bid coverage ratio of 1.9582 percent.

The 28-day term deposits remained undersubscribed as tenders for the P140 billion offering only amounted to P83.35 billion for a lower bid coverage ratio of 0.5954 percent.

The auction committee of the BSP decided to maintain the TDF volume at P180 billion on June 28 comprising of P40 billion for seven-day term deposits and P140 billion for 28-day term deposits.

BSP Governor Amando Tetangco Jr. earlier said in a text message the overall results of the TDF auction do not appear to show a significant change in the system liquidity from recent auctions.

He added the 28-day term deposits continued to be undersubscribed due to the unwinding by the trust departments of their placements in the TDF.

“The outturn in the 28-day deposits could have been influenced by the nearing end date for the winding down of trust unit placements in the TDF,” he said.

The BSP has introduced the TDF and converted the special deposit account (SDA) facility into the ODF after shifting to the interest rate corridor (IRC) system in June last year.

Both the TDF and ODF are used to mop up excess liquidity in the financial system. The shift to the IRC system is aimed at bringing market rates closer to the policy rates.

Latest data released by the BSP showed money supply or liquidity in the financial system expanded by 11.2 percent to P9.52 trillion in end-April from P8.56 trillion in end-April last year.