Cash-rich banks gobble up term deposits

MANILA, Philippines — Cash-rich banks gobbled up term deposits as tenders during yesterday’s auction reached as much as P645.18 billion, 1.5 times the P430 billion offering as liquidity in the system remains ample amid the coronavirus pandemic.

BSP Deputy Governor Francisco Dakila Jr. said   the Term Deposit Facility (TDF) auction showed that there is continued ample liquidity in the financial system.     “All tenors were oversubscribed,” Dakila said.

Bids for the seven-day term deposits amounted to P251.53 billion versus the increased P180 billion issuance, while tenders for the 14-day tenor reached P297.14 billion compared to the higher P200-billion volume.

Likewise, bids for the 28-day term deposits amounted to P96.51 billion, almost two times the increased volume of P50 billion.

“Going forward, the BSP will remain guided by its assessment of liquidity conditions and market developments in the conduct of its monetary operations,” Dakila said.

The yield of the seven-day tenor gained 0.31 basis points to 1.8377 percent yesterday from last week’s 1.8346 percent, while that of the 28-day term deposits went up by 0.2 basis points to 1.8436 percent from 1.8416 percent.

On the other hand, the 14-day term deposits fetched 1.8485 percent, 0.35 basis points lower than last week’s 1.8520 percent.

Last Sept. 18, the BSP  successfully launched its own securities via the offering of P20 billion worth of 28-day  bills. Banks swarmed the maiden auction with bids amounting to P43.36 billion.

The issuance of its own securities as part of its initiative to shift to a more market-based monetary operation provides an additional instrument for managing liquidity in the financial system.

It is scheduled to auction P30 billion worth of BSP bills on Friday.

The Monetary Board is likely to keep interest rates steady anew today after taking a prudent pause and left interest rates unchanged for the first time this year last Aug. 20 to allow previous aggressive monetary actions work its way through the economy.