TDF yields climb after central bank’s rate hike

YIELDS FETCHED for term deposits moved higher this week, in line with the central bank’s expectations, following an aggressive rate hike which took effect early this month.

Banks wanted to park as much as P116.396 billion in idle funds under the Bangko Sentral ng Pilipinas (BSP) on Wednesday, higher than the P106.739 billion they offered to lock in under the term deposit facility (TDF).

The amount also settled above the P100 billion on the auction block, indicating abundant excess liquidity in the financial system.

Demand improved for these short-term papers, with a bias towards the two-week tenor as players sought to maximize gains from their unused funds. Meanwhile, average rates shot up to fresh record highs across all tenors.

The seven-day deposits saw tenders reach P43.811 billion, rising from the P42.169 billion seen the previous week and well above the P40 billion which the central bank wanted to sell.

In turn, banks asked for margins worth 4.2878% on average, climbing from the 4.2069% rate fetched a week ago as players sought for returns ranging from 4.1-4.375%.

Bulk of the bids went to the 14-day tenor, which received P49.25 billion pledges versus the BSP’s P40 billion offer. This reversed last week’s pale demand which settled at just P37.887 billion.