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TDF yields mixed on geopolitical concerns

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BSP
BW FILE PHOTO

TERM DEPOSIT yields were mixed on Wednesday on the back of an escalation of oil prices brought about by worries from the attack on Saudi Arabia’s oil facility.

The central bank received bids amounting to P96.435 billion for its term deposit facility (TDF) on Wednesday, higher than the P80 billion it wanted to sell.

This amount also beat the P93.395 billion the Bangko Sentral ng Pilipinas (BSP) received last week against a P50-billion offering.

Broken down, demand for seven-day papers amounted to P32.598 billion, well beyond the P20 billion on offer and also beating last week’s P23.7 billion in bids for a P10-billion offering.

Rates for this tenor ranged from 4.29% to 4.385%, a slightly higher margin compared to last week’s 4.3-4.4% range. The average rate settled at 4.3323%, 1.63 basis points (bp) lower than last week’s 4.3486%.

For the 14-day deposits, demand totalled P31.314 billion, more than the P30 billion the BSP offered. However, this declined from the P34.454 billion in bids tendered last week against a P20-billion offer.




Banks sought returns ranging from 4.3% to 4.545% from the two-week papers, inching up from last week’s 4.25-4.465% range. The average rate stood at 4.4139%, 1.44 bps higher than last week’s 4.3995%.

Meanwhile, the 28-day papers fetched tenders worth P32.523 billion against the P30 billion on offer but slipping from last week’s P35.241 billion worth of bids for the BSP’s P20-billion auction volume.

Yields asked for by lenders played around 4.3% to 4.5140%, a wider band compared to last week’s 4.40-4.525% range, causing its rate to average at 4.4578%, 3.29 bps lower than last week’s 4.4907%.

“The results of the TDF auction reflected an increase in the liquidity to be siphoned from the financial system owing to the release of funds from the deposits of the national government with the BSP,” Deputy Governor Francisco G. Dakila told reporters in an email.

Rizal Commercial Banking Corp. chief economist Michael L. Ricafort attributed this week’s mixed yield performance to the attack on Saudi Aramco’s oil facility which pushed oil prices higher early this week.

“The mixed yield performance…may be largely attributed to the net increase in global crude oil prices to two-month highs after the drone attacks in Saudi Arabia’s major oil production facilities…as this could still lead to some slight upticks in the local inflation rate based on the latest net increase in global crude oil prices since the start of this week after the weekend attacks,” Mr. Ricafort said.

He however noted that prices have “already eased…after signals that Saudi Arabia crude oil production could be fully restored sooner than earlier expectations.”

The TDF is the central bank’s primary tool to shore up excess liquidity in the financial system and to better guide market interest rates.

BSP Governor Benjamin E. Diokno has said the central bank is looking to cut benchmark rates by another 25 bps as early as its meeting on Sept. 26. — Luz Wendy T. Noble

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