Investors gaining appetite for term deposits — BSP

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) expects investors to continue to swarm its term deposit facility as the auction committee continues to adjust the volume of the weekly auction.

BSP Deputy Governor Diwa Guinigundo said the reduction in the offered volume particularly for the 28-day term deposits was warranted and would help guide market rates closer to the policy rate.

“Banks competed for the reduced volume and restrained their bids. Thus,  the oversubscription and lower bid rates. We expect this to continue given the robust credit growth,” he said.

Latest data from the BSP showed liquidity or money supply increased 15.4 percent while bank lending rose 20.4 percent in August.

Last Wednesday, both the shorter- and longer-dated term deposits were oversubscribed.

The shorter-dated term deposits remained oversubscribed with tenders reaching P64.07 billion. The BSP auction committee made a full award of P40 billion.

Likewise, the longer-dated term deposit offering of P100 billion was also oversubscribed as bids reached P102.88 billion.

The BSP has slashed the volume of the TDF to P140 billion as it lowered the size for the longer-dated term deposits to P100 billion from P110 billion but retained the volume of the shorter-dated term deposits at P40 billion.

Last September, the central bank reduced the volume of the facility for the first time since it was introduced in June last year to P150 billion from the previous size of P180 billion. It reduced the volume for the 28-day term deposits to P110 billion from P140 billion.

As a result, the seven-day term deposits fetched a lower rate of 3.3554 percent from 3.3664 percent last week with accepted rates ranging from 3.23 to 3.38 percent.

On the other hand, the yield of the 28-day term deposits eased to 3.4925 percent from last week’s 3.4939 percent as accepted yields ranged between 2.5 and 3.5 percent.