Yields on BSP’s term deposits end mixed as offer goes undersubscribed

YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits were mixed on Wednesday as the offer went undersubscribed, with market sentiment affected by monetary easing expectations and political developments in the country.

The central bank’s term deposit facility (TDF) attracted bids amounting to P202.697 billion on Wednesday, below the P220 billion on the auction block and the P250.471 billion seen a week ago for a P190-billion offer. The BSP awarded just P194.697 billion in papers.

Broken down, tenders for the seven-day papers reached just P87.456 billion on Wednesday, lower than the P110-billion auctioned off by the central bank. This was also below the P115.922 billion in bids for the P100-billion offer seen the previous week. The BSP accepted only P85.456-billion worth of bids to cap the increase in yields.

Accepted yields ranged from 5.74% to 5.78%, a wider band compared with the 5.74% to 5.77% recorded a week ago. This caused the average rate of the one-week deposits to inch up by 0.39 basis point (bp) to 5.7579% from 5.754% previously.

Meanwhile, bids for the 14-day term deposits amounted to P115.241 billion on Wednesday, higher than the P110-billion offering but below the P134.549 billion in tenders for the P90 billion placed on the auction block last week. However, the central bank awarded just P109.241 billion in two-week papers on Wednesday.

The BSP accepted bids carrying rates of 5.7% to 5.79%, wider than the 5.76% to 5.79% margin recorded a week ago. With this, the average rate for the two-week deposits inched down by 0.57 bp to 5.7695% from the 5.7752% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for more than four years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the BSP bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.

“The BSP TDF average auction yields were little changed after correcting slightly lower for two straight weeks amid some political noises lately, though offset by dovish signals [from the central bank],” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Former President Rodrigo R. Duterte was arrested by Philippine police on Tuesday at the request of the International Criminal Court (ICC) for alleged crimes against humanity. He was taken to a chartered plane en route to The Hague later in the evening.

The International Criminal Police Organization’s (Interpol) office in the Philippines got a copy of the ICC arrest warrant early Tuesday, and local police enforced it, Malacañang said.

The war on drugs was Mr. Duterte’s signature campaign platform.

The ICC has been investigating the ex-President for alleged crimes against humanity that he supposedly committed when he was Davao City mayor and during the first three years of his government, when the Philippines was still a party to the international tribunal.

Meanwhile, BSP Governor Eli M. Remolona, Jr. on Tuesday said a rate cut is still “on the table” at their policy meeting next month, signaling “a few more” rate cuts for the rest of the year.

The Monetary Board will meet to discuss policy on April 10.

The central bank unexpectedly kept benchmark borrowing costs steady at the February meeting, opting to keep the policy rate at 5.75%. — Luisa Maria Jacinta C. Jocson