YIELDS on the central bank’s term deposits were mixed ahead of the monetary policy signals from the US Federal Reserve and the release of fourth-quarter and full-year 2021 Philippine gross domestic product (GDP) data.
Total bids for the term deposit facility of the central bank reached P651.558 billion on Wednesday, going beyond the P550-billion offer but failing to beat the P703.29 billion in tenders last week.
Broken down, the seven-day deposits fetched bids amounting to P240.097 billion, higher than the P240 billion auctioned off by the central bank but lower than the P253.606 billion seen in the previous week’s auction.
Accepted rates for the tenor ranged from 1.665% to 2.25%, wider than the 1.6875% to 1.7375% band recorded last week. This caused the average rate to increase by 0.99 basis point (bp) to 1.7227% from 1.7128% previously.
Meanwhile, bids for the 14-day papers reached P411.461 billion, higher than the P310-billion offering but failing to beat the P449.684 billion seen the previous Wednesday.
Banks asked for yields ranging from 1.5% to 1.7175%, lower than the 1.695% to 1.7375% margin seen a week ago. With this, the average rate of the two-week term deposits dropped by 2.87 bps to 1.6972% from 1.7259% on Jan. 19.
The central bank has not auctioned 28-day term deposits for more than a year to give way to its weekly offerings of securities with the same tenor.
The term deposit facility (TDF) and the short-term securities are used by the BSP to gather excess liquidity in the financial system and to better guide market rates.
“TDF auction yields were mixed week on week before the Fed monetary policy-setting decision and the latest GDP data amid some shift to short-term tenors, with the latest decline in Treasury bill (T-bill) yields in anticipation for faster Fed rate hikes,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The Federal Market Open Committee is expected to announce its monetary policy stance overnight after its Tuesday to Wednesday review. The market will be waiting for signals related to its timetable on interest rate hikes.
The government made a full award of the T-bills it auctioned off on Monday as rates declined while investors await signals from the Fed.
The Bureau of the Treasury raised P15 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P76.37 billion, more than five times the initial offer but slightly lower than the P77.68 billion in bids seen last week.
The 91-, 182-, and the 364-day T-bills were quoted at average yields that were lower by 18.2 bps (to 0.693%), 2 bps (1.0777%), and 0.5 bp (to 1.415%) from a week earlier.
Meanwhile, the Philippine Statistics Authority will release fourth-quarter and full-year 2021 GDP data on Thursday.
A BusinessWorld poll of 18 analysts last week yielded a median estimate of 6.5% for the fourth quarter, which could in turn bring the full-year growth to 5.3% for 2021.
If realized, the full-year growth estimate will be within the downgraded 5-5.5% target set by economic managers. It would also be a turnaround from the record 9.6% contraction in 2020, which was the worst in Southeast Asia.
Analysts said the more relaxed quarantine restrictions toward the end of the year spurred economic activity. — L.W.T. Noble