Yields on term deposits inch up as bids decline on rising prices

YIELDS on the central bank’s term deposits inched higher on Wednesday amid lower demand as investors remained cautious due to the continued increase in inflation and global oil prices.

Total demand for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) amounted to P523.769 billion yesterday, failing to beat the P540 billion on the auction block as well as the P700.754 billion in bids seen last week.

Broken down, tenders for the one-week term deposits amounted to P145.424 billion, lower than the P190-billion program and the P283.031 billion in tenders seen last week.

Accepted rates for the seven-day papers ranged from 1.61% to 2.05%, a wider margin compared with the 1.6% to 1.675% logged a week ago. This brought the tenor’s average rate to 1.6742%, inching up by 4.1 basis points (bps) from the 1.6332% seen on March 3.

Meanwhile, the central bank sold P350 billion as planned in 14-day term deposits as tenders reached P378.345 billion. This was below the P417.723 billion in bids recorded in the previous auction.


Lenders asked for yields ranging from 1.66% to 2%, a narrower band compared with the 1.6475% to 2% range logged last week. With this, the average rate for the two-week debt papers rose by 7.4 bps to 1.8544% from the 1.7804% logged in the previous auction.

The BSP did not offer 28-day papers for the 21st consecutive week to give way to its weekly offering of bills with the same tenor.

The TDF and BSP securities are tools used by the central bank to mop up excess liquidity in the financial system and to better guide market interest rates.

The uptick in TDF yields followed the continued upward correction in global oil prices and local data showing quicker inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Fuel prices increased anew on Tuesday backed by expectations of recovery that will be supported by the $1.9-trillion stimulus bill approved by the US Senate, Reuters reported.

Brent crude futures for May increased 32 cents or 0.5% to $68.56 a barrel by 0125 GMT. Meanwhile, prices of the US West Texas Intermediate crude for April inched up 19 cents or 0.3% to $65.24 per barrel.

At home, inflation rose 4.7% in February, marking the second consecutive month the reading breached the 2-4% annual target of the BSP. Data from the Philippine Statistics Authority showed this was fueled by higher food prices. — L.W.T. Noble with Reuters


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