Term deposit rates rise anew

MANILA, Philippines — Term deposit rates rose across the board for the second straight week as investors shifted their funds to the higher yielding five-year retail Treasury bonds (RTBs) as well as the bigger-than-expected economic contraction in the second quarter, according to the Bangko Sentral ng Pilipinas (BSP).

The yield of the seven-day term deposits went up by 2.68 basis points to 1.781 percent yesterday from 1.7542 percent last week, while that of the 14-day tenor rose by 10.92 basis points to 1.8658 percent from 1.7566 percent.

Likewise, the rate for the 28-day term deposits went up by 1.15 basis point to 1.7770 percent from 1.7655 percent.

BSP Deputy Governor Francisco Dakila Jr. said the higher rates at the term deposit facility (TDF) auction yesterday reflected the reaction of investors to the record 16.5 percent contraction of the gross domestic product (GDP) in the second quarter from 0.7 percent in the first quarter.

“The TDF auction results reflected in part the temporary impact of the scheduled settlement of the retail Treasury bonds as well as the market participants’ reaction to recent developments such as the release of the lower-than-expected second quarter GDP data,” Dakila said.

The government, through the Bureau of the Treasury (BTr), raised a record P516.3 billion from the sale of five-year RTBs that carry a coupon rate of 2.625 percent.

“Nevertheless, financial system liquidity remains ample as majority of bids remained close to the overnight deposit facility rates,” Dakila said.

He said the TDF was undersubscribed as bids amounted only to P264.94 billion versus the lowered volume of P320 billion.

Bids for the seven-day tenor amounted to P98.58 billion, lower than the P140 billion volume, while tenders for the 14-day term deposits reached P104.13 billion versus the lowered volume of P130 billion.

On the other hand, the 28-day tenor was oversubscribed as bids reached P62.23 billion versus the lowered volume of P50 billion.

“Looking ahead, the BSP’s monetary operations will remain guided by its assessment of market developments and liquidity conditions,” Dakila said.