Term deposit rates pick up

YIELDS on term deposits picked up anew yesterday as banks matched the offerings of the Bangko Sentral ng Pilipinas (BSP), mirroring market expectations for rising interest rates.

Players betted as much as P97.548 billion under the term deposit facility (TDF) during Wednesday’s auction, slightly higher than the P96.262 billion the previous week and more than the P90 billion which the central bank placed on the auction block.

Yields maintained their ascent from the previous week even as the offerings went oversubscribed, with the market preference shifting towards the short end.

Demand for the seven-day tenor recovered to reach P50.121 billion, even higher than the P47.031 billion received a week ago to surpass the P40-billion auction size. Yields posted a slight increase to average 3.4434% compared to 3.4397% a week ago. Meanwhile, bids received for the 14-day deposits softened to P30.661 billion, down from P31.297 billion although still more than the P30 billion which the BSP wanted to sell. Yields averaged 3.4704%, a tad higher than the 3.4648% fetched during the April 25 exercise.

The 28-day instruments also received tepid demand this week, as bids slipped to P16.766 billion from P17.934 billion the previous week to again settle below the P20-billion offering. Still, rates sought by banks inched up to 3.465% from 3.4574%.

The TDF is currently the central bank’s main tool in capturing excess funds in the local financial system. The BSP expects to keep market rates closer to the 3% benchmark rate by paying returns to banks who park their excess funds under the facility.