P180-b term deposits undersubscribed

THE P180-billion worth of term deposits offered by Bangko Sentral ng Pilipinas in its weekly auction on Wednesday were undersubscribed by P52.5 billion due mainly to sluggish demand from investors in month-long instruments.

Data showed that the seven-day P30 billion deposits continued to attract banks and trust entities as total bids reached P41.34 billion and fetched a weighted average accepted yield of 3.36 percent.

However, the P150-billion month-long instruments lured total bids of just P86.16 billion and had a weighted average accepted yield of 3.45 percent.

Despite the successive under-subscriptions, Bangko Sentral is keeping the weekly volume of P180 billion during its next auction set on April 26.

Bangko Sentral Governor Amando Tetangco Jr. said earlier that one of the reasons for the under-subscriptions was the retail treasury bonds’ settlement on April 11, 2017.

The Bureau of the Treasury successfully raised P70 billion in its latest issuance of retail treasury bonds. National Treasurer Rosalia de Leon said strong demand for the 3-year security set the coupon at 4.25 percent with total tenders reaching P86.2 billion for a bid-to-cover ratio of 2.87 percent.

This prompted the auction committee to expand its offering from the initial announcement of P30 billion to P70 billion to accommodate market appetite.

Tetangco also cited reports that banks were earmarking funds for their reserve requirement compliance.

“We will continue to monitor bank positions and refresh our liquidity forecasts as needed,” Tetangco said.

Bangko Sentral Deputy Governor Diwa Guinigundo said earlier the regulator was on a wait-and-see mode regarding any move to adjust the weekly volume, because it would be hard to increase the volume and then render the market in a tighter condition. He said that situation would be unnecessary because it could, in any way, hamper the momentum of economic growth.

Previous oversubscriptions in 2016 prompted the regulator to increase by P50 billion the weekly volume from the previous P130 billion to P180 billion starting Dec. 1, 2016 to more effectively siphon off excess liquidity in the financial system.

The amount of week-long deposits was increased by P20 billion to P30 billion from P10 billion, while the month-long deposits were raised P30 billion to P150 billion from P120 billion.

Topics: term deposits , Bangko Sentral ng Pilipinas , BSP , auction
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