THE P180 billion worth of term deposits offered by Bangko Sentral ng Pilipinas remained undersubscribed Wednesday due to investors’ sluggish demand for the seven-day and month-long instruments.
Data showed tenders for the seven-day deposits worth P40 billion stood at P35 billion and had a weighted average accepted yield of 3.3 percent. The P140-billion 28-day deposits, meanwhile, lured total bids of P106.19 billion and fetched a weighted average accepted yield of 3.5 percent.
This resulted in total bids of P141 billion for the weekly auction, significantly lower than the volume of P180 billion. Bangko Sentral will keep the weekly volume in its next auction on Aug. 2 despite the latest undersubscription.
Bangko Sentral officials earlier blamed the successful issuance of retail treasury bonds by the Bureau of the Treasury in April as the main reason for investors’ less appetite for the month-long term deposits.
The Bureau of the Treasury in April raised P175 billion from its three-year retail treasury bonds offering, including those generated from roadshows conducted nationwide. There were also reports that banks were setting aside funds for their reserve requirement compliance.
Previous over-subscriptions in 2016 prompted the regulator to increase 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.
Bangko Sentral in May increased the week-long volume to P40 billion from P30 billion, while the month-long volume was reduced to P140 billion from P150 billion.
Bangko Sentral adopted the interest rate corridor system in June last year so that through calibrated auctioning, the transmission of monetary policy would improve.