Term deposits fetch mixed results

Term deposits fetched mixed results during yesterday’s auction at the Bangko Sentral ng Pilipinas.

Seven- day term deposits were oversubscribed with tenders reaching P43.664 billion for the P30 billion issuance. It fetched an average rate of 3.0269 percent, slightly lower than last week’s result of 3.0431 percent.

Bids for the longer dated term deposits, meanwhile, posted a reversal from last week’s under subscription, as tenders amounted to P199.73 billion for the P150 billion offering. The average rate fetched by 28-day term deposits rose to 3.4338 percent from last week’s 3.401 percent.

BSP Deputy Governor Diwa Guinigundo said the results showed the market generally preferred issues with shorter tenors amid global uncertainties caused by the economic and political climate in the US.

“Based on these trends, we see the clear preference of the market for shorter dated placements and therefore their willingness to bid a little lower,” Guinigundo said in a text message.

“In turn, this short term preference continues to be driven by the prolonged uncertainty in the US political and economic dynamics and the widely expected three interest rate hikes by the US Fed ( Federal Reserve) even as both Europe and Japan may sustain their accommodative monetary policy,” he said.

Term deposits are used as a tool to mop up excess liquidity in the financial system.

Guinigundo said the BSP is continuing to see a liquid market for the term deposit facility.

For now, he said the central bank has decided to maintain the volume at P180 billion until Feb. 8 as it continues to monitor developments in the external market.