BIDS FOR THE central bank’s term deposits declined as investors were looking ahead to a possible rate cut at this week’s policy meeting and amid concerns related to the coronavirus outbreak.

Tenders for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) totaled P207.804 billion on Wednesday, going beyond the P200 billion on offer.

However, total tenders this week slipped from the P262.975 billion logged a week ago.

Bids for the one-week papers stood at P66.749 billion, lower than the P80- billion offered and also down from the P105.23 billion in bids logged a week ago.

Rates for the seven-day deposits ranged from 3.95% to 4.40%, a wider margin compared to the 4-4.05% band seen on Jan. 29. This caused the average rate for the one-week deposits to settle at 4.0240%, inching up by 0.07 basis point (bp) from last week’s 4.0233%.

For the two-week tenor, tenders amounted to P64.814 billion, higher than the P60 billion auctioned off by the BSP but failing to beat the P94.08 billion in bids last week.

Lenders asked for yields ranging from 3.98% to 4.05%, coming from the 4-4.07% margin logged the previous week. This led the average rate for the 14-day papers to settle at 4.0197%, slipping by 2 bps from the 4.0397% seen last week.

Meanwhile, the 28-day papers attracted tenders amounting to P76.241 billion, higher than the P60 billion up for grabs and also surpassing the P63.665 billion in bids last week.

Banks sought returns ranging from 4% to 4.0625%, a slimmer range compared to the 4% to 4.11% margin logged on Jan. 29. This caused the average rate for 28-day term deposits to settle at 4.0419%, down by 3.22 bps from the 4.0741% seen a week ago.

ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said the auction results came after the retail Treasury bond (RTB) issuance and amid expectations of a rate cut this week.

“Lower subscription likely because investors are staying liquid ahead of the settlement of the recent monster retail treasury bond where the government issued roughly P250 billion in fresh issuance,” Mr. Mapa said in an e-mail.

“Despite the lower amount of subscription, lower TDF yields reflect market expectation for a BSP rate cut in the near term,” Mr. Mapa added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower yields may partly be due to market fears amid the coronavirus outbreak.

“On external factors, concerns over the latest novel coronavirus (nCoV)…led to the sharp decline in global crude oil prices as well as some increase in global risk aversion…thereby partly leading to the latest easing in most BSP TDF auction yields,” he said in an e-mail. — Luz Wendy T. Noble

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