Term deposit yields mixed as gov’t retail bond offer starts
YIELDS on the central bank’s term deposit facility (TDF) ended mixed on Wednesday following the start of the government’s retail Treasury bond (RTB) offering and concerns over tensions between Russia and Ukraine.
Demand for the central bank’s term deposits reached P637.875 billion on Wednesday, surpassing the P570 billion auctioned off by the central bank but lower than the P666.222 billion in bids last week.
Broken down, the seven-day deposits fetched bids amounting to P302.236 billion, above the P190-billion offering and the P266 billion worth of tenders seen the previous week.
Lenders asked for yields ranging from 1.65% to 1.7125%, slimmer than the 1.6175% to 1.75% band last week. This caused the average rate of the one-week papers to drop by 2.13 basis points (bps) to 1.6858% from 1.7071% previously.
Meanwhile, tenders for the 14-day papers amounted to P335.639 billion, below the P380-billion offer and the P399.432 billion in bids a week ago.
Accepted rates for the tenor were from 1.65% to 2.2%, wider than the 1.625% to 1.7% margin seen in the previous week’s auction. With this, the average rate of the two-week deposits increased by 2.57 bps to 1.7044% from 1.6787%
The BSP has not offered 28-day term deposits for more than a year to give way to its weekly auctions of securities with the same tenor.
The term deposit facility and the one-month bills are used by the BSP to gather excess liquidity in the financial system and to better guide market rates.
TDF yields ended mixed on Wednesday as the offer came a day after the price-setting auction for the five-year RTBs being offered by the National Government, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
The Treasury raised an initial P120.764 billion on Tuesday through the five-year RTBs that fetched a coupon rate of 4.875%. This is already more than six times the P30 billion initially targeted by the government.
Proceeds from the transaction will fund pandemic recovery efforts. The bonds will be sold until Feb. 28, while its settlement will be on March 4.
RTBs target small investors who want low-risk, higher-yielding savings instruments backed by the government.
Mr. Ricafort said the market was also cautious due to geopolitical concerns caused by the rift between Russia and Ukraine.
Kyiv appeared to blame Russia for a cyberattack on Tuesday as US President Joseph R. Biden warned that more than 150,000 Russian troops were still amassed near Ukraine’s borders after Moscow’s announcement of a partial pullback was met with skepticism, Reuters reported.
World powers are engaged in one of the deepest crises in East-West relations for decades, jostling over post-Cold War influence and energy supplies as Moscow wants to stop the former Soviet neighbor ever joining the NATO military alliance.
Western nations have suggested arms control and confidence-building steps to defuse the standoff, which has prompted them to urge their citizens to leave Ukraine because an attack could come at any time. Russia denies it has any plans to invade.
Hours after Moscow’s announcement, Ukraine said the online networks of its defense ministry and two banks were overwhelmed in what is called a distributed denial-of-service. The maneuver works when hackers flood a network with unusually high volumes of data traffic to paralyze it.
Although Kyiv did not name who was behind the incident, a statement suggested it was pointing the finger at Russia. — Luz Wendy T. Noble with Reuters
