Connect with us

Hi, what are you looking for?

News

TDF yields rise ahead of expected BSP tightening

BW FILE PHOTO

YIELDS on the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) continued to rise on Wednesday, with both tenors undersubscribed, on expectations of a big rate hike next week.

Total bids for the central bank’s term deposits reached P337.24 billion, below the P380-billion offer for the week. Still, this was higher than the P261.287 billion in tenders seen last week for the same offer volume.

Broken down, the seven-day papers fetched bids amounting to P203.107 billion, lower than the P240 billion auctioned off by the BSP. This was above the P144.578 billion in tenders logged in the previous auction, where the BSP offered P220 billion.

Banks asked for yields ranging from 4.899% to 5.35%, a higher margin compared with the 4.8% to 5.15% band seen a week ago. This caused the average rate of the one-week paper to climb by 10.99 basis points (bps) to 5.0668% from 4.9569% previously.

Meanwhile, demand for the 14-day term deposits amounted to P134.133 billion, below the P140-billion auctioned off by the BSP but higher than P116.709 billion in tenders recorded a week ago for a P160-billion offer.

Accepted rates for the papers were from 4.95% to 5.625%, a wider band versus the 4.75% to 5.35% range seen on Nov. 2. With this, the average rate of the two-week deposit rose by 22.32 bps to 5.2799% from 5.0567% in the previous week’s auction.    

The central bank has not auctioned 28-day term deposits for more than a year to give way to its weekly offering of securities with the same tenor.

The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.

“The BSP maintained the TDF volume offer at P380 billion but reallocated P240 billion (from P220 billion) to the 7-day tenor and P140 billion (from P160 billion) to the 14-day tenor,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement on Wednesday. “The auction was undersubscribed with bid-to-cover ratios at 0.85x and 0.96x the respective volume offerings in the 7-day and 14-day tenors.”

“The results of the TDF auction continue to show ample liquidity in the financial system as eligible market participants price in their expectations of a rate hike from the BSP,” Mr. Dakila said. “Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments.”

Yields on the BSP’s term deposits were higher after the central bank chief said the Monetary Board will deliver a big rate increase during its next policy-setting meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

BSP Governor Felipe M. Medalla last week said the Monetary Board will hike benchmark interest rates by 75 bps at its Nov. 17 meeting to keep in step with the US Federal Reserve as it seeks to stabilize prices.

The Philippine central bank has raised rates by 225 bps since May, while the Fed has delivered hikes worth 375 bps since March.

Philippine headline inflation surged to 7.7% in October, its quickest pace in almost 14 years, from 6.9% in September and 4% in October 2021.

For the first 10 months, inflation averaged 5.4%, still lower than the BSP’s 5.6% full-year forecast but higher than its 2-4% target. — Keisha B. Ta-asan

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Editor’s Pick

Britain’s retailers benefited from a November sales boost fuelled by Black Friday discounts and colder weather as consumers bought winter coats, hot water bottles...

Editor’s Pick

The biggest sector of the economy remained in a downturn last month as new orders continued to fall owing to the cost of living...

News

1 of 2 AL WAKRAH, Qatar — Goalkeeper Dominik Livakovic saved three spot-kicks as Croatia beat Japan 3-1 in a penalty shootout to reach...

News

SECOND-SEEDED UP will take on No. 3 NU. — PHILIPPINE STAR/ RUSSELL PALMA Games On Wednesday(Smart Araneta Coliseum)Women’s Finals Game 111 a.m. — NU...

News

THE BLU BOYS may have missed the bus to the Super Round of the recently concluded men’s softball World Cup, but they gave the...

News

SMART Omega Call of Duty: Mobile (CODM) team finally got their visa application approved Dec. 5, in time for the CODM World Championships in...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.