YIELDS ON THE central bank’s term deposits ended mixed on Wednesday after the government rejected all bids for Treasury bonds (T-bonds) at an auction on Tuesday and ahead of the Monetary Board’s last policy review for 2021.

Total bids for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) amounted to P502.663 billion on Wednesday, going beyond the P400-billion offering as well as the P479.591 billion in tenders seen a week earlier.

Broken down, bids for the seven-day papers amounted to P242.034 billion, higher than the P150 billion auctioned off by the BSP and the P175.622 billion in demand logged in the previous offer.

Accepted rates for the papers were from 1.7% to 1.775%, slimmer than the 1.7% to 1.9% range seen a week ago. With this, the average rate of the one-week papers slipped 1 basis point (bp) to 1.7486% from 1.7586% previously.

Meanwhile, the 14-day papers fetched tenders amounting to P260.629 billion, surpassing the P250-billion offer but failing to beat the P303.969 billion in bids seen a week ago.

Lenders asked for yields ranging from 1.753% to 2%, narrowing slightly from the 1.75% to 2% band seen on Dec. 9. This caused the average rate of the tenor to increase by 3.31 bps to 1.8572% from 1.8241%.

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

TDF yields were mixed after the government rejected all bids for its T-bond offer for the second straight week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Bureau of the Treasury (BTr) on Tuesday did not accept any bids for its offer of reissued seven-year government securities, which have a remaining life of six years and eight months. This, even as tenders hit P52.267 billion, more than twice the P20-billion offering.

Had it fully awarded its offer, the reissued seven-year bonds’ average yield would have declined by 7.3 bps to 4.395% from the 4.468% fetched the last time the series was offered.

This would also have been lower than the 4.5425% quoted for seven-year bonds at the secondary market before the auction on Tuesday, based on PHP Bloomberg Valuation Service Reference Rates posted on the Philippine Dealing System’s website.

Inflation eased to a four-month low of 4.2% in November, mainly due to the slower increase in food prices. However, it was still above the 2-4% target of the BSP.

Mr. Ricafort said the market also factored in the BSP’s upcoming policy review, where it is widely expected to hold fire.

All 15 analysts polled by BusinessWorld last week expect the Monetary Board to keep benchmark rates at record lows this Thursday, citing the need to continue supporting the economy given the threat of the Omicron variant.

BSP Governor Benjamin E. Diokno has said they will remain accommodative for as long as needed to make the recovery more sustainable, but will be ready to respond to any second-round effects of inflation that could be a risk to price stability. — Luz Wendy T. Noble