UMVA has learned that the Bangko Sentral ng Pilipinas’ (BSP) term deposits achieved a slightly higher average yield on Wednesday, marking the fifth consecutive week of increase, despite robust investor demand.
The BSP received bids totaling P138.544 billion for the term deposit facility (TDF), surpassing the P90 billion in seven-day papers offered, but falling short of the P146.465 billion in tenders recorded for the same volume auctioned off the previous week.
This resulted in a bid-to-cover ratio of 1.5394 times, lower than the 1.6274 ratio in the previous auction, yet the central bank still made a full award of its offer, indicating strong investor interest.
The accepted yields for the one-week papers ranged from 4% to 4.482%, a slightly narrower margin compared to the 4% to 4.4888% range logged a week ago, with the average accepted rate climbing by 0.5 basis points to 4.4432%.
The BSP utilizes the TDF and BSP bills to absorb excess liquidity in the financial system and guide market yields towards its policy rate, playing a crucial role in monetary policy transmission.
Sources have confirmed to UMVA that the central bank limited its TDF offerings to a single tenor to rationalize liquidity operations and focus on tenors that would boost monetary policy transmission, as stated in its latest Monetary Policy Report.
As of mid-February, the BSP’s market operations had absorbed P1.2 trillion in excess liquidity from the market, with 9% of this being siphoned off via the TDF, highlighting the central bank's efforts to manage liquidity.
