YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits inched higher on Wednesday as the offer went undersubscribed due to uncertainty here and abroad.
Total demand for the term deposit facility (TDF) of the central bank amounted to P122.771 billion on Wednesday, well below the P200-billion offering and the P202.697 billion in bids for a P220-billion offer a week ago. The BSP awarded just P115.771 billion in papers to cap the rise in yields.
Broken down, tenders for the seven-day papers reached P61.127 billion, lower than the P90 billion placed on the auction block as well as the P87.456 billion in bids for a P110-billion offering seen in the previous week. The central bank accepted only P59.127 billion in tenders.
Accepted yields ranged from 5.74% to 5.79%, a slightly wider band compared with the 5.74% to 5.78% seen a week ago. With this, the average rate of the one-week term deposits edged up by 0.89 basis point (bp) to 5.7668% from 5.7579% previously.
Meanwhile, the 14-day papers fetched bids amounting to P61.644 billion, below the P110-billion offer and the P115.241 billion in tenders for the same offer volume a week ago. The BSP made a P56.644-billion award of the two-week papers.
Tenders accepted carried rates from 5.748% to 5.79%, also narrower than the 5.7% to 5.79% range seen last week. This caused the average rate of the two-week papers to go up by 0.28 bp to 5.7723% from 5.7695% in the prior auction.
The BSP has not auctioned off 28-day term deposits for more than four years to give way to its weekly offerings of securities with the same tenor.
Both the TDF and BSP bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.
TDF yields were higher amid uncertainties here and abroad, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
At home, political noise related to former President Rodrigo R. Duterte’s arrest are keeping investors on wait-and-see mode “as a matter of prudence if there would be risk of massive protest rallies or any form of destabilization from the important priorities of the government,” Mr. Ricafort said.
Mr. Duterte, who led the Philippines from 2016 to 2022, was arrested on charges of crimes against humanity. He faced the International Criminal Court (ICC) in a pre-trial session last week.
He could become the first former Asian head of state to stand trial at the ICC.
Meanwhile, markets are also awaiting developments in the Trump administration’s tariff policies, with concerns of a trade war causing global yields to rise recently.
US President Donald J. Trump still intends for new reciprocal tariff rates to take effect on April 2, the White House said on Tuesday, despite earlier comments from Treasury Secretary Scott Bessent that indicated a possible delay in their activation, Reuters reported.
“The intent is to enact tariffs on April 2,” the official said when asked to clarify Mr. Bessent’s comments that countries would get an opportunity to avoid higher tariffs by reducing their own trade barriers.
“Unless the tariff and non-tariff barriers are equalized, or the US has higher tariffs, the tariffs will go into effect,” the White House official said.
Mr. Bessent told Fox Business Network’s Mornings with Maria program that Mr. Trump on April 2 would give trading partner countries a reciprocal tariff number that reflects their own rates, nontariff trade barriers, currency practice and other factors, but could negotiate to avoid a “tariff wall.”
His remarks were taken to mean that while the proposed duties would be announced on April 2, their implementation could be delayed to allow time for negotiations. But the White House official said any such deals would need to be negotiated in advance to avoid the new tariffs.
The dueling comments illustrate the developing nature of Mr. Trump’s new reciprocal tariffs just two weeks out from the April 2 activation deadline.
Financial markets have become increasingly nervous about the impact of Mr. Trump’s tariffs and retaliation from trading partners will have on inflation and economic growth.
“The TDF average auction yields were slightly higher since they were already almost the same as the key BSP overnight (one-day) rate of 5.75%, as there must be some slight premium for seven-day and 14-day tenors to become more attractive in siphoning off some peso liquidity in the financial system,” Mr. Ricafort added.
Recent dovish signals from the BSP chief helped cap the increase in term deposit rates, he said.
BSP Governor Eli M. Remolona, Jr. last week said a rate cut is still “on the table” at the Monetary Board’s meeting on April 10, signaling “a few more” rate cuts for the rest of the year.
The BSP last month unexpectedly paused its easing cycle amid global uncertainties, keeping the policy rate at 5.75%. — Luisa Maria Jacinta C. Jocson with Reuters
