Investors flocked to the P180-billion auction of term deposits by Bangko Sentral ng Pilipinas in the first week of 2017.
Bangko Sentral said the first weekly auction was oversubscribed, as total bids for the P180-billion volume reached P261.51 billion.
The week-long P30 billion worth of deposits attracted total tenders of P43.99 billion and fetched a weighted average accepted yield of 3.07 percent. Meanwhile, the month-long P150-billion deposits lured total bids of P217.523 billion and had a weighted average accepted yield of 3.37 percent.
“This is the first oversubscription for the 28-day tenor since Dece. 7 and lower maximum rate of 3.5 percent. This may be due to market normalization after the holidays and the FOMC [Federal Open Market Committee] meeting. We will continue to monitor price action in the auctions to see if there is need to adjust policy levers,” Bangko Sentral Governor Amando Tetangco Jr. said in a text message.
Deputy Governor Diwa Guinigundo said there appeared to be tight liquidity during the holiday season as banks prepared for higher cash demand from their clients, resulting in their lower placements in the facility.
“This was reflected in lower bid to cover ratio. That is the essence of seasonality. Today, more and more of this cash is redeposited with the banks resulting in their higher propensity to make placements with the BSP,” Guinigundo said.
Previous auctions last month were undersubscribed as banks needed cash for their clients’ requirements during the holiday season. Particularly, the P180 billion put on the auction block on Dec. 28 lured total bids of only P148.839 billion.
Bangko Sentral Governor Amando Tetangco Jr. said earlier there was “more appetite for the shorter tenor” deposits and could be “due to seasonality and some market cautiousness” amid the developments in the global financial markets.
