Weak demand prompts BSP to trim term deposit volume

The Bangko Sentral ng Pilipinas (BSP) has slightly lowered the volume of term deposits to be auctioned next week as the term deposit auction facility (TDF) was undersubscribed yesterday.

The TDF facility will offer P110 billion worth of term deposits on May 30, P10 billion lower than the P120 billion offered yesterday. The volume of the 28-day term deposits was reduced to P20 billion from P10 billion, while the volume for the seven and 14-day tenors were retained at P50 billion and P40 billion, respectively.

Bids for the three tenors yesterday only reached P98.46 billion, lower than the offer size of P120 billion.

Tenders for the P50 billion seven-day term deposit offering amounted to P42.6 billion, while the 14-day tenor was likewise undersubscribed at P32.15 billion versus the issue size of P40 billion.

Likewise, the 28-day tenor was also undersubscribed as bids reached P23.71 billion versus the P30 billion offering.

Yesterday’s auction of term deposits yielded mixed results. The seven-day term deposits fetched a higher rate of 3.5866 percent from 3.5123 percent last week, while the yield of the 28-day tenor rose to 3.5716 percent from 3.4979 percent.

On the other hand, the yield of the 14-day tenor slipped to 3.5783 percent from 3.5855 percent.

Banks continue to calibrate their bids in terms of rates after the Monetary Board raised benchmark rates for the first time in more than three years last May 10.

The central bank raised interest rates by 25 basis points as latest forecasts have further shifted higher, indicating that inflation pressures could become more broad-based over the policy horizon.

This brought the overnight deposit facility to 2.75 percent, the overnight reverse repurchase facility to 3.25 percent, and the overnight lending facility to 3.75 percent.