Term deposits fetch lower yield as demand jumps

THE BANGKO SENTRAL ng Pilipinas’ (BSP) term deposits fetched a lower average yield on Wednesday as the offer drew strong demand.

Total bids for the term deposit facility (TDF) reached P102.793 billion, well above the P60 billion in seven-day papers placed on the auction block and the P84.714 billion in bids for the P70 billion offered the prior week.

This translated to a bid-to-cover ratio of 1.7132 times, higher than the 1.2102 ratio in the previous auction.

With this, the central bank fully awarded its P60-billion offering.

The BSP said in a statement that it made a full award as it saw strong appetite for its reduced offer volume, which caused the average rate to inch lower.

Accepted rates for the one-week deposits were between 4% and 4.2395%, narrower than the 4% to 4.249% band seen in the previous week. This brought the weighted average accepted yield down by 2.3 basis points to 4.2078% from 4.2308%.

“The marginal decline in the seven-day TDF auction yield may still reflect the excess peso liquidity in the banking or financial system,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said via Viber.

He said investors prefer safer and near-cash investments amid the ongoing market volatility, but market sentiment slightly improved on Wednesday as US President Donald J. Trump said that the Middle East war could end in two to three weeks.

The central bank uses the TDF and BSP bills to mop up excess liquidity in the financial system and better guide market rates towards the policy rate.

The BSP last auctioned off both the seven-day and 14-day deposits on Oct. 29. It has not offered 28-day term deposits for over five years to give way to its weekly offerings of securities with the same tenor.

In its February 2026 Monetary Policy Report, the central bank said it has limited its TDF offerings to a single tenor to rationalize its liquidity operations and focus on tenors that would boost monetary policy transmission.

As of mid-February, the BSP’s market operations have absorbed P1.2 trillion in excess liquidity from the market, with 9% of this being siphoned off via the TDF. — Katherine K. Chan