YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits inched up on Wednesday ahead of the retail Treasury bond (RTB) offering of the government.

Total bids for the BSP’s term deposit facility (TDF) hit P510.385 billion, surpassing the P260 billion on the auction block. This is also higher than the P483.207 billion in tenders seen on July 8 against a P250-billion offering.

The one-week term deposits attracted bids worth P216.735 billion, beyond the P120 billion on offer as well as the P211.7 billion recorded last week.

Rates for the seven-day papers ranged from 1.75% to 1.76%, barely changed against the 1.75% to 1.7625% band logged a week ago. This caused the average rate for the tenor to settle at 1.7557%, increasing by 0.19 basis point (bp) from the 1.7538% seen in the previous week.

Meanwhile, the 14-day deposits saw total tenders of P184.52 billion, higher than P110 billion on the auction block and the P172.245 billion in bids last week for the P90-billion offer.

Banks asked for returns from 1.75% to 1.76%, a slightly narrower margin compared to the 1.75% to 1.7644% logged on July 8. With this, the average rate for the 14-day papers stood at 1.7564%, picking up by 0.16 bp from the 1.7548% seen last week.

For the 28-day papers, bids totalled P109.13 billion, more than the P60 billion the BSP offered as well as the P99.262 billion in tenders seen last week for the P40 billion on the auction block.

Yields on the one-month papers ranged from 1.75% to 1.765%, a marginally thinner band than the 1.75% to 1.77% seen last week. This caused the tenor’s average rate to settle at 1.7585%, rising by 0.07 bp from 1.7578% previously.

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

“The auction results show that financial system liquidity remains ample even as more excess funds are absorbed gradually in the TDF’s longer maturities,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

Meanwhile, the government’s offer of RTBs may have caused yields to inch up, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“The upcoming RTB offering starting Thursday, July 16 could have led to the slight increase in TDF auction yields as this could siphon off some of the excess peso liquidity in the financial system,” Mr. Ricafort said in a text message.

The Bureau of the Treasury (BTr) is eyeing at least P30 billion from its offering of five-year retail bonds, which is set to run from this Thursday until Aug. 7. The BTr said it may opt to increase the volume and also close the offer period earlier as needed.

The bonds will be sold in minimum denominations of P5,000. Interest rates will be based on current market levels of comparable securities and shall be paid quarterly in arrears. — L.W.T. Noble