BSP term deposit rates inch up; auction oversubscribed

The rates for the 28-day term deposits offered by the Bangko Sentral ng Pilipinas yesterday further inched up while sustaining strong demand from banks and trust institutions.

The latest term deposit facility auction was still oversubscribed as tenders amounted to P262.9 billion for the P130-billion offering.

For the P10 billion in seven-day term deposits, bids reached P30.7 billion, as the yield remained at 2.5-2.525 percent.

As for the 28-day tenor, the BSP fetched P232.2 billion in tenders.

The accepted yield for the one-month facility again slightly rose to a range of 2.5-2.8 percent from 2.5-2.75 percent last week.

For the next two TDF auctions on Nov. 16 and 23, the BSP will offer the same total volume of P130 billion.

Operational adjustments had been implemented by the central bank ahead of the implementation of the interest rate corridor (IRC) aimed at bringing market interest rates closer to the policy rate and mopping up excess liquidity in the system.

The overnight lending facility—the upper bound of the corridor—was cut to 3.5 percent from the former repurchase (RP) facility of 6 percent.

The policy rate or reverse repurchase (RRP) facility had been converted into overnight, with its rate cut to 3 percent from the previous RRP facility of 4 percent.

The BSP kept the overnight deposit facility or the former special deposit accounts (SDA) rate of 2.5 percent, which served as the lower bound of the corridor. —Ben de Vera