THE P180 billion worth of term deposits offered by Bangko Sentral ng Pilipinas in its weekly auction on Wednesday were again undersubscribed due to weak demand from investors both on month-long and seven-day instruments.
The P30-billion seven-day deposits fetched total tenders of just P21.35 billion with a weighted average accepted yield of 3.04 percent. The month-long instruments of P150 billion attracted total bids of P149.9 billion.
Bangko Sentral Governor Amando Tetangco Jr. said earlier the auction results of lower subscriptions and slightly higher rates were expected given the availability of fresh supply from the national government in the form of retail treasury bonds.
He said banks were still looking toward shorter-dated instruments, and, as expected, would try to squeeze as much yield from alternative investment outlets.
The Bureau of the Treasury last week 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 said the regulator would closely be monitoring liquidity levels against the forecast path. “I think it’s important to provide some stability in the auction facilities of the BSP. The ultimate game plan is for banks to lend to the market for long-term project that will generate employment and increase wealth… The TDF is here to help steer interest rates and not to be an investment outlet,” he said.
Despite the undersubscription, Bangko Sentral would keep the current weekly volume of P180 billion during the auctions set on April 12 and 19, 2017.
Bangko Sentral Deputy Governor Diwa Guinigundo said the regulator was on a wait-and-see mode 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 over-subscriptions 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 increased by P30 billion to P150 billion from P120 billion.
The adjustment on Dec. 1 was the sixth time that Bangko Sentral increased the volume. From the original volume of P30 billion, it was increased to P50 billion, P70 billion, P90 billion, P110 billion and P130 billion.