Yields on term deposits mixed after PHL global bond offering

YIELDS ON THE central bank’s term deposits ended mixed on Wednesday, with more investors opting for the longer tenor following the country’s global bond sale.

Total bids for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) amounted to P652.901 billion on Wednesday, above the P530 billion on offer as well as the P645.342 billion logged in the previous week’s auction.

Broken down, demand for the one-week papers stood at P208.413 billion, higher than the P140 billion auctioned off by the BSP but failing to beat the P220.938 billion in tenders seen last week.

Banks asked for yields ranging from 1.7% to 1.7345%, a narrower range compared with the 1.7% to 1.75% seen a week ago. This caused the average rate of the seven-day term deposits to drop by 1.15 basis points (bps) to 1.7261% from 1.7376% previously.

Meanwhile, tenders for the 14-day papers amounted to P444.488 billion, surpassing the P390-billion offering as well as the P424.404 billion in demand seen a week ago.

Accepted rates for the tenor ranged from 1.75% to 1.83%, a slightly slimmer margin versus the 1.75% to 1.8499% band seen in the previous week’s auction. With this, the two-week paper’s average rate inched up by 0.29 bp to 1.8114% from the 1.8085% quoted on June 23.

The central bank did not offer the 28-day term deposits for the 36th straight week to give way to its weekly offerings of bills with the same tenor.

The term deposits and the BSP’s short-term securities are used by the central bank to gather excess liquidity in the financial system and to better guide market rates.

“The TDF auction results continue to show market participants’ search for yield in the longer tenor amid ample liquidity in the financial system. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity condition and market developments,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

BSP Governor Benjamin E. Diokno last month said the central bank’s policy measures have infused P2.2 trillion in fresh liquidity into the financial system, which is equivalent to 12.1% of gross domestic product.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said TDF yields ended mixed following the government’s global bond sale earlier this week.

The government on Monday raised $3 billion (P146 billion) from the sale of US dollar-denominated global bonds in a dual-tranche offering, which will be used to fund the national budget.

National Treasurer Rosalia V. de Leon said the 25-year tranche raised $2.25 billion, while the 10.5-year tranche generated $750 million.

The 10.5-year bonds were priced at 60 bps over the benchmark US Treasury yield, carrying a 1.95% coupon, while the 25-year debt papers fetched a coupon of 3.2%, the Bureau of the Treasury said. — Luz Wendy T. Noble