YIELDS on the central bank’s term deposits dropped on Wednesday after the government’s latest bond issuance and the decline in oil prices.

Total bids for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) amounted to P514.845 billion on Wednesday, surpassing the P370-billion offer as well as the P446.48 billion in tenders a week ago.

Broken down, bids for the seven-day papers amounted to P198.738 billion. This is higher than the P150 billion auctioned off by the BSP and the P185.754 billion in tenders seen a week earlier.

Accepted rates were from 1.83% to 2%, narrower than the 1.7% to 2.1% range in the previous week’s auction. This caused the average rate of the papers to decline by 1.36 basis points (bps) to 1.9467% from 1.9603% previously.

Meanwhile, the 14-day papers fetched bids amounting to P316.107 billion, well above the P220-billion offer and the P260.726 billion in tenders the previous Wednesday.

Lenders asked for yields ranging from 1.8825% to 2.1%, slightly narrower than the 1.8% to 2.21% band seen on March 16. With this, the average rate of the two-week term deposits fell by 5.31 bps to 2.0374% from 2.0905% in the prior auction.

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

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

TDF yields declined after the government’s latest bond issuance, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Bureau of the Treasury raised $2.25 billion through a triple-tranche dollar-denominated bond offering, it said on Tuesday.

Broken down, the Treasury sold $1 billion through its maiden 25-year green bond offer, $500 million through five-year bonds, and another $750 million through its 10.5-year bonds.

The market also factored in the decline in oil prices, Mr. Ricafort added.

Reuters reported the global oil prices posted a second straight weekly loss after hitting 14-year highs two weeks ago amid the escalating Russia-Ukraine war.

Local prices of gasoline, diesel, and kerosene were rolled back by P5.45, P11.45, and P8.55 per liter on Tuesday, respectively, after 11 straight weeks of increases. However, these prices are still up by P14.90, P19.20, and P16.35 per liter, respectively, since the start of the year. — Luz Wendy T. Noble with Reuters

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