Frigid market forces BSP to cut term deposit offer

Banks again shied away from the 28-day term deposits offered on Wednesday, pushing the Bangko Sentral ng Pilipinas (BSP) to cut to P140 billion the volume to be auctioned off next week.

Bids for the P150-billion 28-day term deposit facility (TDF) reached only P114.113 billion on Wednesday, making it the sixth straight week that the tenor was undersubscribed. The BSP awarded P113.113 billion.

The accepted yield for the one-month facility was within the 3.3-3.5 percent range, up from 3.25-3.5 percent last week.

For the seven-day TDF, P66.502 billion were tendered for the P30-billion offering.

The BSP awarded all the one-week term deposits at the 3-3.4 percent yield, a narrower range compared to last week’s 2.9-3.5 percent.

The BSP would still offer a total of P180 billion in TDF on May 3, thus raising to P40 billion the volume for the more attractive seven-day facility.

The BSP had blamed the previous weeks’ undersubscribed TDF auctions to the government’s successful sale of retail treasury bonds (RTBs) aimed at small investors.

The Bureau of the Treasury this month issued P181 billion in RTBs: P70 billion were awarded to banks during the rate-setting auction on March 28, while the general investing public snapped an additional P111 billion during the public offer period last March 28-April 7.

Launched in June last year, the weekly TDF auctions form part of the implementation of the BSP’s interest rate corridor, aimed at bringing market rates closer to the policy rate of 3 percent. The TDF auctions mop up excess liquidity. —BEN O. DE VERA

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