Term deposits fetch higher yields

MANILA, Philippines — Term deposits fetched slightly higher rates across-the-board during the Bangko Sentral ng Pilipinas’ (BSP) auction yesterday even as banks swamped all tenors.

According to the BSP, the average yield of seven-day term deposits rose 0.53 basis points to 4.7249 percent from last week’s level of 4.7196 percent.

Total tenders reached P44.325 billion, 10.81 percent higher than the P40 billion volume for the offering.

The 14-day tenor also fetched an average rate of 4.7631 percent, 0.78 basis points up from the 4.7553 percent recorded in the previous auction.

The term deposits were likewise oversubscribed, with total bids reaching P23.425 billion, exceeding the P20 billion offer size.

Lastly, the rates for 28-day term deposits averaged 4.8798 percent, 3.05 basis points higher than the 4.8493 percent registered last week. Bids for the P10 billion offering reached P13.913 billion.

Following this auction’s oversubscription, the central bank increased the volume for its term deposit facility (TDF) next week to P100 billion from the current level of P70 billion.

Of the amount, P50 billion will comprise of seven-day term deposits, while the 14-day and 28-day tenors will account for P30 billion and P20 billion, respectively.

The yields of term deposits hit record levels earlier this month amid the series of rate hikes by the central bank in four consecutive rate-setting meetings since May to curb rising inflationary pressures.

Inflation averaged five percent in the first nine months, exceeding the BSP’s two to four percent target.