Term deposit rates rise on low demand

 MANILA, Philippines - Term deposits fetched higher rates yesterday, with the auction still undersubscribed as funds shifted to retail treasury bonds (RTBs) being offered by the national government.

The yield of the seven-day term deposits kicked up to 3.0487 percent yesterday from last week’s 2.997 percent.

The longer dated 28-day term deposits likewise fetched a higher yield of 3.4208 percent from 3.3746 percent.

Both the seven- and 28-day term deposits were undersubscribed. Total tenders for the P180 billion term deposit facility (TDF) offering yesterday only amounted to P171.27 billion.

Bids for the seven-day term deposits amounted to P21.35 billion for the P30-billion issuance translating to a lower bid cover ratio of 0.7118, while the 28-day term deposits fell short again of the P150-billion offer size as tenders amounted only to P149.92 billion for a bid cover ratio of 0.9995 percent.

BSP Governor Amando Tetangco Jr. said authorities were not surprised by the increase in term deposit rates as well as the lack of appetite for the debt instrument as banks continued to look for alternative investment outlets in search for higher yields.

“The undersubscription in the TDF and the relatively higher uptick in auction rates are not with surprise in light of the successful RTB auction, which continued to indicate market appetite for relatively short dated paper with good value,” he said.