TDF yields continue to increase

TERM DEPOSITS auctioned off by the central bank fetched higher yields on Wednesday to track US Treasuries. — BW FILE PHOTO

YIELDS ON the central bank’s term deposits continued to pick up on Wednesday despite higher bids, reflecting the uptrend in the rates of benchmark US government bonds.

Bids for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) reached P653.865 billion on Wednesday, higher than the P480 billion on the auction block as well as the P523.769 billion in tenders logged in the previous offering.

Broken down, demand for the seven-day papers amounted to P181.075 billion, above the P140 billion auctioned off by the central bank and the P145.424 billion in bids seen a week ago.

Banks asked for yields ranging from 1.64% to 1.999%, a narrower band compared with the 1.61% to 2.05% seen at the previous week’s offering. With this, the average accepted rate of the tenor rose 13.07 basis points (bps) to 1.8049% from 1.6742% previously.

Meanwhile, the 14-day term deposits attracted tenders worth P472.79 billion yesterday, surpassing the P340-billion offering as well as the P378.345 billion in bids logged last week.

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Accepted rates for the two-week tenor fell within 1.75% to 1.95%, a slimmer range versus the 1.66% to 2% margin logged in the previous auction. This caused the average rate for the debt instruments to rise by 2.95 bps to 1.8839% from the 1.8544% seen on March 10.

The BSP did not offer 28-day papers for the 22nd 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 higher yields seen for the term deposits yesterday reflect the climb in the rates of benchmark US government bonds, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Reuters reported that US Treasury yields rose on Tuesday as investors awaited fresh signals from the Federal Open Market Committee’s policy-setting meeting from Tuesday to Wednesday.

The benchmark 10-year Treasuries’ yield rose 1.1 bps to 1.6179% while the 20-year tenor’s rate increased 1.9 bps to 2.2952%.

Back home, debt papers offered by the Bureau of the Treasury (BTr) have also been fetching higher yields.

At the BTr’s auction on Monday, the 91-day Treasury bills (T-bills) were quoted at an average rate of 1.232%, up 9.3 bps from the 1.139% seen in the previous week’s offering. Meanwhile, yields on the 182-day and 364-day T-bills also picked up by 21.1 bps and 13.8 bps to 1.527% and 1.99%, respectively. — Luz Wendy T. Noble with Reuters

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