Term deposit yields reach record levels

Term deposits yesterday fetched record yields after the Bangko Sentral ng Pilipinas (BSP) delivered back-toback rate hikes as inflation expectations remained elevated due to possible second-round effects from ongoing price pressures.

The yield of the seven-day term deposits hit a record high of 3.7523 percent from 3.6927 percent last week, while the 14-day tenor also fetched a record high rate of 3.8689 percent from 3.7342 percent.

Likewise, the 28-day tenor also fetched a record high yield of 3.8471

percent from last week’s 3.7326 percent.

Banks recalibrated their bids after the Monetary Board raised anew interest rates by 25 basis points last June 20 and hinted of further policy action as needed to achieve its price and financial stability objectives.

This brought the overnight reverse repurchase rate to 3.50 percent as well as the overnight deposit and lending rates to three and four percent, respectively.

The central bank has so far raised benchmark rates by 50 basis points this year.

The term deposit auction facility (TDF) was slightly oversubscribed yesterday as total tenders for the P100-billion auction amounted to P105.63 billion.

The P40 billion seven-day tenor was slightly oversubscribed as bids amounted to P45.83 billion.

On the other hand, both the 14and 28-day term deposits remained undersubscribed.

Tenders for the 14-day term deposits amounted to P31.99 billion versus the reduced volume of P40 billion, while bids for the 28-day tenor only reached P14.81 billion against the issue size of P20 billion.