Term deposit rates hit record high

MANILA, Philippines — Term deposits continued yesterday to fetch record high yields across all tenors, as banks swarmed the term deposit auction facility (TDF) with around P100 billion in additional funds injected into the financial system following the reduction of the bank reserve requirement ratio.

The seven-day tenor fetched a record high yield of 3.7006 percent from last week’s 3.693 percent, while the 14-day term deposits also commanded a higher rate of 3.6916 percent from 3.6683 percent.

Likewise, the yield of the 28-day term deposits rose to a record high of 3.7179 percent from 3.6431 percent last week.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the higher demand for shorter dated term deposits was expected as banks prepare for the settlement of the three-year retail treasury bonds (RTBs) being offered by the national government until June 9.

The Bureau of Treasury (BTr) last week launched the sale of three-year RTBs due 2021. The debt papers fetched a coupon rate of 4.875 percent.

It initially raised P66 billion, more than double the initial offer size of P30 billion, following the settlement of P130 billion in maturities last week. Total tenders amounted to P92.8 billion.

Guinigundo said banks have parked around P400 billion in the overnight reverse repurchase, as well as overnight deposit facilities of the central bank.

Yesterday’s auction was oversubscribed as bids reached P120.72 billion versus the reduced volume of P100 billion.

Bids for the seven-day term deposits amounted to P62.08 billion versus the reduced volume of P40 billion, while the 14-day tenor was also oversubscribed at P45.37 billion against the issue size of P40 billion.