Cash-rich banks swarm safe assets

Cash-rich banks continued to swarm the liquidity absorption facilities of the Bangko Sentral ng Pilipinas (BSP) amid ample excess funds in the financial system.

BSP Deputy Governor Francisco Dakila Jr. said banks continued to park their excess funds in the term deposit facility (TDF) auction as tenders amounted to P418.78 billion yesterday.

Bids for the seven-day tenor reached P278.47 billion or 2.3 times the P120 billion offering, while tenders for the 14-day term deposits amounted to P140.3 billion or 2.8 times the increased volume of P50 billion.

“The auction results continue to indicate very strong market interest for safe assets amid ample financial liquidity. The BSP takes all these into consideration in assessing current financial liquidity conditions in the calibration of the volume and tenors for its TDF auctions,” Dakila said.

He said the auction committee has yet to resume the sale of 28-day term deposits.

The BSP suspended the weekly TDF starting March 18 to address the liquidity needs of banks after Malacañang imposed a Luzon-wide enhanced community quarantine.

After resuming the auction for the seven-day tenor last April 15 and the 14-day term deposits last June 10, the central bank has yet to resume the sale of the 28-day term deposits to encourage banks to lend excess funds to individuals and companies particularly micro, small, and medium enterprises (MSMEs) affected by the health crisis.

Dakila said average interest rates continued to decline with the yield of the seven-day term deposits slipping by 0.01 basis point to 2.2504 percent from last week’s 2.2505 percent and that of the 14-day tenor declining by 0.04 basis points to 2.2508 percent from 2.2512 percent.

He also noted the range of accepted bid rates were narrow at 2.25 to 2.2505 percent for the seven-day tenor and 2.25 to 2.251 percent for the 14-day term deposits. –