Term deposits oversubscribed, rates end mixed

MANILA, Philippines — Banks continued to swarm the term deposit auction facility (TDF) despite the ongoing retail treasury bond (RTB) offering as liquidity in the financial system remained ample.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said strong inflows from higher foreign direct investments (FDIs) and foreign portfolio investments translate to higher liquidity.

He said the country posted a balance of payments (BOP) surplus of $2.7 billion in January, a reversal of the $531 million deficit recorded in January last year and the highest since the $3.18 billion booked in July 2012.

A surplus means more foreign exchange flowed into the country from exports, remittances from overseas Filipinos, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

Inflows of foreign portfolio investments or hot money reached more than $800 million since the start of the year.

“That means more dollar inflows and more dollar inflows mean more liquidity in the system,” Guinigundo said.

The central bank’s liquidity absorption facility was oversubscribed anew yesterday with tenders for the three tenors reaching P69.99 billion versus the issue size of P50 billion.

Tenders for the P20-billion seven-day term deposits reached P36.76 billion, while bids for the 14-day tenor amounted to P21.87 billion versus the P20 billion offering.

Likewise, the 28-day tenor was oversubscribed as bids amounted to P11.36 billion versus the offer size of P10 billion.

“It only means we have ample liquidity in the system,” Guinigundo said.

The Bureau of the Treasury has initially raised almost $114 billion from the issuance of five-year RTBs that fetched a coupon of 6.25 percent. The offering is set to end by March 8.

The yields of term deposits were mixed yesterday.

The seven-day tenor fetched a lower rate of 5.1027 percent from last week’s 5.1248 percent.

On the other hand, the yield of the 14-day term deposits inched up to 5.1661 percent from 5.1659 percent, while the 28-day tenor also fetched a higher rate of 5.2017 percent from 5.1822 percent.