YIELDS ON THE Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) continued to slip following its easing moves in the past months to help mitigate the impact of the coronavirus crisis on the economy.

Total tenders for the term deposits offered by the BSP on Wednesday amounted to P353.789 billion, surpassing the P180 billion on the auction block as the central bank resumed its offer of 14-day deposits after three months of not offering the tenor. Last week, bids for the seven-day deposits amounted to P328.68 billion, higher than the P170 billion on the auction block.

Tenders for the seven-day papers auctioned by the BSP yesterday totaled P284.139 billion, going beyond the P120 billion up for grabs but lower than the last week’s bids.

Rates for the one-week term deposits ranged from 2.25% to 2.2515%, a slimmer band compared to the 2.25% to 2.2525% seen on June 3. With this, the average rate of the seven-day papers settled at 2.2507%, dipping by 0.03 basis point (bp) from the 2.251% seen recorded last week.

Meanwhile, tenders for the 14-day term deposits hit P70.65 billion, more than thrice the P20 billion on the auction block but slightly lower than the P70.844 billion seen for March 11’s P50-billion offering — the last time the BSP offered this tenor.

Lenders asked for yields ranging from 2.25% to 2.254%, coming from the 3.75% to 3.812% band logged during the March 11 auction. This caused its average rate to come in at 2.252%, plunging by 152.37 bps from the 3.7757% recorded three months ago.

“The results in the auction show strong market interest for BSP’s deposit facilities as financial system liquidity further stabilizes,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The BSP halted offering term deposits at the onset of the Luzon lockdown in March to provide support to the banking system. In mid-April, it started offering seven-day papers again. The central bank said on Tuesday that it will gradually resume offering the other TDF tenors as liquidity continues to stabilize.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the easing stance by the BSP caused yields to drop.

“The high demand is pushing average yields lower and this is a direct and outright impact of lower monetary policy rates and other easing measures that the BSP has implemented in the last few months,” Mr. Asuncion said in an e-mail.

The BSP has reduced benchmark interest rates by 125 bps this year, which brought the overnight reverse repurchase, deposit, and lending rates to record lows of 2.75%, 2.25%, and 3.25%, respectively.

Meanwhile, the reserve requirement ratio of big banks was also trimmed by 200 bps to 12% in April. — L.W.T. Noble

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