BIDS FOR THE central bank’s term deposits declined from the previous week but still filled the offer volume as liquidity returned following the holidays, causing rates to inch down.

Total bids for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) amounted to P262.975 billion on Wednesday, higher than the P200 billion on offer.

However, this week’s bids dropped from the P298.656 billion worth of tenders seen last week.

“There was oversubscription in all three TDF tenors as liquidity continued to return to the system following the holiday season,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement on Wednesday.

Bids for the seven-day papers hit P105.23 billion, going beyond the P80 billion auctioned off but lower compared to the P134.77 billion worth of tenders seen on Jan. 22.

Rates for the one-week deposits ranged from 4% to 4.05%, unchanged from the margin seen a week ago. The average rate for the papers was at 4.0233%, slipping by 0.68 basis point (bp) from last week’s 4.0301%.

Meanwhile, tenders for the two-week term papers clocked in at P94.08 billion, surpassing the P60 billion auctioned off by BSP and also higher than the P76.564 billion in bids last week.

Lenders asked for yields from 4% to 4.07%, a narrower margin compared to the 4% to 4.1% seen on Jan. 22. This brought the average rate for the 14-day papers to 4.0397%, dipping by 1.33 bp from the 4.053% seen last week.

On the other hand, the 28-day papers attracted bids amounting to P63.665 billion, higher than the P60 billion up for grabs but failing to beat the P87.322 billion in bids last week for the same amount on the auction block.

Banks sought returns ranging from 4% to 4.11%, a wider band compared to the 4.044% to 4.13% margin logged on the Jan. 22 offering. This caused the average rate for 28-day term deposits to settle at 4.0741%, down by 1.76 bps from the 4.0917% seen a week ago.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower yields came on the back of downward corrections in local interest rate benchmarks.

“BSP TDF yields have been mostly lower since the start of 2020, amid the first week-on-week downward correction in most local interest rate benchmarks since the start of 2020 PHP Bloomberg Valuation (BVAL) yields mostly corrected lower last week,” Mr. Ricafort said in an e-mail.

Lower TDF yields also came after external factors including the latest coronavirus outbreak that could slow global economic growth especially in China and in other affected countries, he said.

“[This] led to some increase in global risk aversion to lead to lower benchmark interest rates…thereby partly leading to the latest easing of the BSP TDF auction yields,” Mr. Ricafort added.

Reuters reported on Wednesday that the death toll from the Wuhan novel coronavirus rose to 132, with the first case in the Middle East already reported.

Chinese authorities said that confirmed cases have risen to a total of 5,974 from 1,459.

“With no end in sight just yet for the virus, we can expect a hit on the tourism sector in the near term as the Philippines may see a drop in its second most important market,” ING Bank NV-Manila said in a note sent to reporters on Wednesday. — Luz Wendy T. Noble with Reuters

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