Bangko Sentral ng Pilipinas said the P180-billion auction of term deposits was undersubscribed Thursday because of the withdrawal of trust accounts from deposit facilities and as banks mainly held on to cash in preparation for the holidays.
The undersubscription was the first time since the term deposit auction under the interest rate corridor system started in June. The total volume of term deposits offered Thursday was the biggest on record.
Data posted on BSP website showed the week-long P30-billion deposits lured total tenders of P15.865 billion, with a weighted average accepted yield of 2.6 percent and a bid coverage ratio of 0.528 percent. Meanwhile, the month-long P150 billion deposits attracted total bids of P113.214 billion, with a weighted average accepted yield of 2.955 percent and bid coverage ratio of 0.754 percent.
“There was undersubscription at auction today. Possible reasons include seasonality [banks holding on to cash for the holidays] and the withdrawal of trust accounts from BSP facilities. These may have brought down the bid to cover ratio to 0.5288 and 0.7548 for the 6-day and 27-day tenor, respectively,” Bangko Sentral Governor Amando Tetangco Jr. said in a text message.
Tetangco assured that the level of liquidity in the financial system remained healthy and non-inflationary. “We nevertheless remain watchful of external developments that may affect domestic liquidity thru shifts in capital flow direction and magnitude,” he said.
