Term deposit rates decline

Short-dated term deposits yesterday fetched lower rates across-the-board as investors swarmed the facility following the end of the holiday season, according to the Bangko Sentral ng Pilipinas (BSP).

During yesterday’s auction, the seven-day term deposits secured a weighted average rate of 4.0851 percent, 7.9 basis points lower than the 4.1641 percent recorded in the previous auction.

The P60 billion offering was 1.59 times oversubscribed, with total tenders amounting to P95.282 billion.

Likewise, the average rate for the 14-day term deposits declined by 12.99 basis points to 4.1065 percent from last week’s level of 4.2364 percent.

Total tenders reached P103.847 billion, more than two times larger than the P50 billion offer size.

Lastly, the 28-day papers saw an average rate of 4.1502 percent, 12.02 basis points down from 4.2704 percent last week.

Healthy demand also met the P50 billion offering, as total bids amounted to P75.021 billion.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said results of the term deposit facility auction reflected the ample liquidity in the market, with funds already returning back to the financial system after the holiday season.

“Total tenders amounted to P274.15 billion with oversubscriptions in all three TDF tenors as liquidity gradually returns following the holiday spending,” Dakila said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., also said the latest decline in term deposit rates may also still be attributed to the recent signals by BSP Governor Benjamin Diokno about a possible 25-basis point cut in local policy rates within the first quarter.

“BSP TDF auction yields continued to ease after crossing the new year, with the accounting year-end and any resulting window dressing activities already done and over with, thereby easing the premium for short-term interest rates,” he said.