Term deposit rates mixed ahead of BSP meeting

MANILA, Philippines — Term deposits yesterday fetched mixed results ahead of the rate-setting meeting of the Bangko Sentral ng Pilipinas (BSP) as liquidity conditions normalize after the successful fund raising activity by the national government.

The yield of the seven-day term deposits slipped by 1.2 basis points to 1.7708 percent yesterday from 1.7810 percent last week, while that of the 14-day tenor declined by 3.11 basis points to 1.8347 percent from1.8658 percent.

On the other hand, the rate for the 28-day term deposits went up by 4.62 basis points to 1.8232 percent from 1.7770 percent.

BSP Deputy Governor Francisco Dakila Jr. said liquidity in the financial system has normalized as the Bureau of the Treasury raised a record P516.3 billion from the sale of five-year retail treasury bonds (RTBs).

“The auction results show that liquidity conditions have normalized following the temporary effect of the scheduled settlement of the RTBs last week, and remains ample,” Dakila said.

Dakila added the term deposit facility auction (TDF) yesterday were oversubscribed as bids amounted to P372.23 billion, higher than the lowered volume of P230 billion.

Tenders for the seven-day tenor amounted to P135.31 billion higher than the reduced P90 billion volume, while tenders for the 14-day term deposits reached P157.75 billion versus the lowered volume of P90 billion.

Likewise, the 28-day tenor was oversubscribed as bids reached P79.17 billion versus the P50 billion offering.

“Going forward, the BSP’s monetary operations will continue to be guided by its assessment of liquidity conditions and market developments,” Dakila said.

The central bank’s Monetary Board is widely anticipated to keep interest rates steady today after the pronouncement made by BSP Governor Benjamin Diokno that the country’s monetary stance remains appropriate for the next few quarters.

Measures implemented by the BSP to soften the blow of the novel coronavirus disease 2019 or COVID-19 pandemic have unleashed P1.3 trillion into the financial system.

These include the cumulative 175-basis points cuts so far this year bringing the benchmark interest rate at an all-time low of 2.25 percent, the lowering of the reserve requirement ratios for banks, the P300 billion repurchase agreement with the Bureau of the Treasury, the purchase of government securities in the secondary market, among others.