Term deposit rates ease from record highs

Term deposits fetched lower yields as banks swarmed yesterday’s auction with rates starting to normalize after the Bangko Sentral ng Pilipinas (BSP) raised benchmark rates by 150 basis points so far this year.

The seven-day tenor fetched a lower rate of 4.7207 percent at the term deposit auction facility (TDF) yesterday, slightly lower than last week’s record high of 4.7274 percent.

The yield of the 14-day term deposits slipped to 4.7650 percent from an alltime high of 4.7729 percent, while the rate of 28-day term deposits eased to 4.8362 percent from a record high of 4.8549 percent.

The P80 billion offering was oversubscribed as bids tendered by banks across all tenors reached P119.07 billion.

Bids for the seven-day term deposits amounted to P66 billion, while bids for the 14-day tenor reached P31.27 billion. Tenders for the 28day tenor amounted to P21.8 billion versus the P10 billion volume.

The BSP has so far raised benchmark rates by 150 basis points to serve as its major weapon in its battle against rising inflation due to higher oil and food prices, weak peso, and the impact of the implementation of the new tax reform law.

This brought the rates for the overnight reverse repurchase to 4.5 percent as well as four percent for the overnight deposit facility and five percent for the overnight lending facility.