YIELDS ON THE central bank’s term deposits ended mixed on Thursday as inflation eased and after the government rejected bids for its offer of Treasury bonds (T-bonds) on Tuesday.
Demand for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) amounted to P479.591 billion on Thursday, surpassing the P430-billion offer as well as the P467.818 billion in tenders logged in the previous week’s auction.
Broken down, bids for the six-day term deposits amounted to P175.622 billion, higher than the P160 billion auctioned off by the central bank but lower than the P181.141 billion in tenders last week, which was for a seven-day tenor.
Banks asked for yields ranging from 1.7% to 1.9%, a narrower margin compared with the 1.71% to 2.19% band a week ago. This caused the average rate of the papers to slip by 0.13 basis point (bp) to 1.7586% from 1.7599% previously.
Meanwhile, the 13-day papers fetched bids worth P303.969 billion, well above the P270-billion offering and also beating the P286.677 billion in tenders last week for a 14-day tenor.
Accepted yields for the 13-day deposits ranged from 1.75% to 2%, tighter than the 1.745% to 2.19% band recorded on Dec. 1. This caused the average rate of the 13-day papers to inch up by 0.15 bp to 1.8241% from 1.8226% in the prior auction.
The term deposit tenors were adjusted in view of the holiday on Wednesday in commemoration of the Feast of the Immaculate Conception of Mary.
The BSP has not auctioned 28-day term deposits for more than a year to give way to its weekly offering of bills with the same tenor.
The central bank uses the TDF and its short-term securities to gather excess liquidity in the financial system and guide market rates.
Yields on the term deposits were mixed as inflation eased to a four-month low in November, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The consumer price index stood at 4.2% last month, slower than the 4.6% in November mainly due to easing food inflation.
However, headline inflation remained above the BSP’s 2-4% target and was faster than the 4% median estimate of 18 analysts in a BusinessWorld poll held last week.
Another factor that caused mixed yield movements was the government’s rejection of all bids for its offer of 10-year T-bonds on Tuesday, Mr. Ricafort added.
The Bureau of the Treasury did not accept any bids for its offer of P20 billion in reissued T-bonds, which have a remaining life of nine years and seven months. The papers attracted P42.44 billion in demand, lower than the P55.37 billion seen the last time the series was sold on Nov. 9.
National Treasurer Rosalia V. de Leon cited high rates for the rejection. — L.W.T. Noble