Term deposit rates mixed

MANILA, Philippines — Term deposit rates were mixed anew yesterday amid the shrinking excess liquidity in the financial system as banks continued to undertake fund raising activities through the issuance of long term negotiable certificates of deposits (LTNCD).

The yield of the seven-day term deposits rose to 3.3849 percent from last week’s 3.3548 percent with accepted rates ranging from 2.5312 percent to 3.45 percent.

On the other hand, the 28-day term deposits fetched a lower rate of 3.4908 percent from 3.4940 percent as accepted yields ranged between 3.45 percent and 3.5 percent.

The shorter-dated term deposits remained undersubscribed with tenders reaching P37.57 billion for the P40 billion issuance while the longer-dated term deposit offering of P90 billion was also undersubscribed as bids only reached P84.51 billion.

BSP Deputy Governor Diwa Guinigundo said the term deposit auction facility (TDF) remained undersubscribed as banks continued to lend more to support the country’s growing economy.

“Total loan growth continued to gain momentum due to very robust economic activities,” he said.

Latest data showed bank lending surged more than 21 percent to P6.76 trillion in end-September from P5.58 billion in end-September last year.

Furthermore, Guinigundo said the LTNCD issuance of several banks siphoned off some excess liquidity in the financial system.

“In short, what is happening is that we see the surplus funds in the system declining in volume that BSP normally mops up. Since these have decreased, the BSP would be simply siphoning less from the market,” he added.

Philippine National Bank raised P6.3 billion from the issuance of LTNCDs while Security Bank Corp. raised P8.6 billion.