YIELDS ON THE central bank’s term deposits ended mixed on Wednesday on slower inflation and following the government’s offering of retail dollar bonds (RDBs).

Demand for the term deposit facility of the Bangko Sentral ng Pilipinas (BSP) reached P532.24 billion on Wednesday, surpassing the P510-billion offer but lower than the P540.613 billion in tenders logged last week.

Broken down, the seven-day papers fetched bids amounting to P195.377 billion, higher than the P150 billion auctioned off by the BSP as well as the P160.051 billion in bids seen in the previous offering.

Lenders sought for rates ranging from 1.69% to 1.875%, a thinner band compared with the 1.68% to 2.2% seen a week ago. This caused the average rate of the one-week term deposits to inch down by 1.12 basis points (bps) to 1.7259% from the 1.7371% in the previous week’s auction.

Meanwhile, tenders for the two-week papers amounted to P336.863 billion, lower than the P360-billion offer as well as the P380.562 billion in bids seen last week.

Accepted rates for the tenor ranged from 1.715% to 2.1%, wider than the 1.7095% to 1.88% margin seen last week. With this, the average rate of the papers increased by 4.42 bps to 1.7885% from 1.7443% previously.

The central bank has not offered 28-day term deposits for more than a year to give way to its weekly offerings of bills with the same tenor.

The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.

“The results of the TDF auction continue to reflect stable market conditions, supported by sustained ample liquidity in the financial system,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The mixed TDF yields reflected market sentiment following the slower-than-expected inflation print in September, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Headline inflation eased to 4.8% last month from 4.9% in August, based on preliminary data reported by the Philippine Statistics Authority on Tuesday. This was slower than the 5% median estimate in a BusinessWorld poll of 17 analysts last week but still above the central bank’s 2-4% target.

The decline in the September inflation print was attributed to slower increase in transport and food prices.

For the first nine months, inflation averaged 4.5%, higher than the central bank’s 4.4% forecast for 2021.

Mr. Ricafort said the RDB offering the Bureau of the Treasury also affected TDF yields.

“This could have siphoned off some of the excess liquidity in the financial system,” he said.

The government raised $1.593 billion from its sale of five-year and 10-year RDBs. The offer ran from Sept. 15 to Oct. 1. — Luz Wendy T. Noble