BSP’s term deposits offering attracts few bids

The one-month term deposits offered by the Bangko Sentral ng Pilipinas Wednesday were undersubscribed ahead of the anticipated announcement by the US Federal Reserve of a rate hike on Thursday morning (Philippine time).

The 28-day term deposit facility (TDF) attracted only P127.487 billion in tenders, below the P150-billion offering.

The BSP accepted all the bids for the one-month facility at a yield of 3-3.5 percent.

The seven-day term deposits, meanwhile, attracted P59.11 billion in bids or almost double the offering of P30 billion.

The BSP awarded the one-week TDF at a yield of between 2.5 and 3.09 percent.

“There was more appetite for the shorter tenor. We see this as being due to seasonality and some market cautiousness ahead of the FOMC meeting this week,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters, referring to the Federal Open Market Committee.

“We will continue to monitor liquidity conditions in the market for the balance of the year as well as expectations for next year to see if there is need to make adjustments to our policy tools going forward,” Tetangco added.

The BSP’s TDF auction on Dec. 1 was undersubscribed for the first time since weekly auctions were started in June, as Tetangco had noted that banks were holding on to cash for the holiday season.

“Because it’s Christmas season, banks would want to have sufficient liquidity buffer so that in case there will be a sudden demand from their clients, they can immediately respond,” Tetangco explained.

Tetangco told reporters that the total volume of term deposits to be auctioned off on Dec. 21 and 28—the last two auctions of the year—would remain P180 billion. Ben de Vera