Term deposit rates mixed

MANILA, Philippines — Term deposit yields were mixed yesterday as the Bangko Sentral ng Pilipinas (BSP) decided to suspend the offering of the 28-day tenor.

The yield of the seven-day tenor gained 0.35 basis points to 1.8466 percent at the Term Deposit Facility (TDF) auction yesterday from 1.8431 percent last week.

On the other hand, the 14-day term deposits fetched 1.8426 percent or 0.66 basis points lower than last week’s 1.8492 percent.

BSP Deputy Governor Francisco Dakila Jr. said there was no offering for the 28-day term deposits. The central bank has been offering 28-day BSP securities since Sept. 18.

Despite the absence of the longer-dated tenor, banks continued to swarm the facility as bids amounted to P574.19 billion, exceeding the P470-billion volume.

“The TDF auction results reflect sustained high level of liquidity in the financial system,” Dakila said.

He said the two tenors were oversubscribed with bids for the seven-day term deposits amounting to P254.48 billion versus the increased P220 billion issuance, while tenders for the 14-day tenor reaching P319.7 billion compared to the higher P250-billion volume.

“Moving forward, the BSP will continue to review and gradually recalibrate its monetary operations, guided by its assessment of market developments and liquidity conditions,” Dakila said.

BSP Governor Benjamin Diokno earlier said the central bank has no intention of cancelling the TDF tenors with the continued offering of the 28-day BSP securities.

“The issuance of BSP securities does not imply the BSP’s TDF will be phased out,” Diokno said.

The BSP chief pointed out the TDF would remain in the central bank toolkit and would be used as a fine tuning instrument along with the overnight reverse repurchase facility to deal with short term fluctuations in liquidity.

The Monetary Board kept interest rates untouched for the second straight month last Oct. 1 as part of a prudent pause to allow previous aggressive monetary actions work its way through the economy.

It has so far slashed interest rates by 175 basis points, bringing the benchmark rate at an all-time low of 2.25 percent, the overnight deposit rate to 1.75 percent and the overnight borrowing rate to 2.75 percent.