Bangko Sentral term deposit yields fall after Treasury bond maturity
By Katherine K. Chan
YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) slipped on Wednesday as strong demand followed the maturity of almost P289 billion in government bonds.
Total tenders reached P128.4 billion, well above the P100 billion on offer and higher than the P98.18 billion in bids for the same auction volume a week earlier. The BSP fully awarded both tenors.
For the seven-day deposits, bids hit P55.593 billion, exceeding the P40-billion offer and the P39.548 billion in tenders for the P50-billion issue last week. The central bank accepted the entire P40 billion.
Accepted yields ranged from 5% to 5.185%, narrower than the 4.96% to 5.2498% margin recorded previously. This brought the average rate down by 1.26 basis points (bps) to 5.0975%.
Meanwhile, the 14-day deposits attracted P72.796 billion in tenders, higher than the P60-billion offer and last week’s P58.632 billion for a P50-billion auction. The BSP awarded the full P60 billion.
Rates for the two-week debt ranged from 4.98% to 5.165%, wider than last week. The average yield fell by 1.45 bps to 5.1149%.
“The auction saw good demand as total tenders rose week on week from P98.2 billion to P128.4 billion,” the BSP said, noting bid-to-cover ratios of 1.39x for the seven-day securities and 1.21x for the 14-day tenor.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said reinvestment demand after the P288.7-billion Treasury bond maturity on Sept. 9 supported the TDF auction.
“The BSP TDF average auction yields were again slightly lower, after the large Treasury bond maturity that could have increased the demand for government securities and reinvestment at still much higher yields,” he said in a Viber message.
He added that the softer yields also reflected the BSP’s recent 25-bp rate cut that reduced the benchmark rate to 5%. The Monetary Board has lowered policy rates by 150 bps since August 2024.
BSP Governor Eli M. Remolona, Jr. and Finance Secretary Ralph G. Recto have signaled a possible additional 25-bp cut this year, though the central bank chief said the easing cycle is nearing its end.
The Monetary Board has two more meetings scheduled for October and December.
