Investor demands drives up term deposit rates Investor demands drives up term deposit rates

MANILA, Philippines — Term deposits on Wednesday fetched higher yields across all tenors as the Bangko Sentral ng Pilipinas (BSP) is widely anticipated to take a pause from its easing cycle.

The seven-day tenor fetched 4.2264 percent at the term deposit auction facility (TDF), 3.41 basis points higher than last week’s 4.1923 percent, while the yield of the 14-day term deposits went up by 8.48 basis points to 4.3184 percent from 4.2336 percent.

Likewise, the yield of the 28-day term deposits increased by 4.76 basis points to 4.3597 percent from 4.3122 percent last week.

Banks continued to park their excess funds in the liquidity absorption facility despite the increase in the volume to P160 billion this week from last week’s P120 billion.

“Total tenders were in line with expectations,” BSP officer-in-charge Francisco Dakila Jr. said.

The seven-day tenor was undersubscribed as bids only amounted to P48.06 billion versus the issue size of P60 billion.

On the other hand, both the 14 and 28-day term deposits were oversubscribed.

Tenders for the 14-day tenor reached P57.8 billion while that of 28-day term deposits amounted to P54.32 billion. The auction committee offered P50 billion worth of 14-day and P50 billion worth of 28-day term deposits.

The BSP has been raising the volume of the liquidity absorption facility as the 100 basis point reduction in the reserve requirement ratio for big and mid-sized banks took effect at the start of this month.

Another 100 basis points reduction in the level of deposits banks are required to keep with the central bank would take effect early next month.