EconomyEditor's PickTerm deposit yields mixed on RTB offering, high US inflation

November 17, 2021

YIELDS on the central bank’s term deposits were mixed on Wednesday. — BW FILE PHOTO

YIELDS on the central bank’s term deposits ended mixed on Wednesday following the start of the government’s offer of retail bonds on Tuesday and amid elevated US consumer inflation.

Total bids for the term deposit facility of the Bangko Sentral ng Pilipinas (BSP) reached P607.646 billion on Wednesday, higher than the P550-billion offering and also beating the P560.497 billion seen a week earlier.

Broken down, demand for the seven-day term deposits amounted to P191.315 billion, surpassing the P170 billion auctioned off by the BSP but lower than the P204.327 billion in tenders logged the previous week.

Accepted rates for the tenor ranged from 1.7% to 1.775%, slightly wider than the 1.7% to 1.76% band seen a week ago. This brought the average rate of the one-week papers to 1.7374%, down by 0.47 basis point (bp) from the 1.7421% logged previously.

Meanwhile, bids for the 14-day term deposits hit P416.331 billion on Wednesday, surpassing the P330-billion offer as well as the P356.17 billion in demand on Nov. 10.

Banks asked for yields ranging from 1.74% to 1.8088%, a narrower margin compared with the 1.74% to 1.85% seen last week. With this, the average rate of the two-week papers inched up by 0.42 bp to 1.7678% from 1.7636% in the prior auction.

The central bank has not offered 28-day term deposits for more than a year to give way to its weekly offering of bills with the same tenor.

The BSP uses the TDF and its short-term securities to mop up excess liquidity in the financial system and guide market rates.

Term deposit yields were mixed on Wednesday after the government’s retail Treasury bond (RTB) offering, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

The Bureau of the Treasury on Tuesday raised an initial P113.545 billion at its price-setting auction for its offer of 5.5-year RTBs. This was oversubscribed by more than five times versus the initial P30-billion offer.

National Treasurer Rosalia V. de Leon said the proceeds will fund the government budget. The RTB public offer will run until Nov. 26, unless closed earlier, and the bonds will be issued on Dec. 2.

US inflation data released last week also affected TDF yields, Mr. Ricafort added.

The US Labor department reported on Nov. 17 that the consumer price index rose 0.9% in October, according to Reuters. This brought the annual increase in the consumer price index to 6.2%, which was the biggest since November 1990. — Luz Wendy T. Noble with Reuters

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