Banks’ rediscount borrowings climb to P615M at end-April

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BANKS SECURED fresh rediscount loans from the Bangko Sentral ng Pilipinas (BSP) last month, largely to fund commercial lending and capital expenses.

Total availments under the central bank’s peso rediscount window reached P615 million in April, lower than the P1.226 billion which players secured in March. The amount is higher than the P15 million availed in April 2017, according to BSP data.

The rediscount window allows banks to acquire fresh money supply from the BSP by posting their loan collectibles from clients as their collateral. The cash — which may come in the peso, dollar or yen — can then be used to grant more loans or service withdrawals, depending on the bank’s needs.

Rediscount borrowings reached P7.651 billion for the first four months of 2018. Half of the loans secured were used for capital asset expenditures, while 42.4% has been extended for commercial credits.

Loan lines were also extended for permanent working capital, services, housing and production, the BSP said.

Credit lines extended under the facility also fulfils the central bank’s mandate as lender of last resort for financial firms.

Peso rediscount loans are charged a uniform rate depending on the maturity date. This came after the BSP shut down the special window which provided lower rates for thrift, rural and cooperative banks in July last year.

For May, loans maturing in 90 days or lower are charged a 3.5625% rate while 180-day credit lines carry a 3.625% spread. These are computed based on the BSP’s overnight lending rate at 3.5% plus term premia.

On the other hand, the dollar and yen rediscount facility extended to exporters remained untouched, sustaining a trend since the previous year.

Rates for the foreign currency rediscount window rose further this May, mirroring an uptick in global yields.

Spreads for dollar-denominated loans climbed to 4.36294% for 90-day loans; 4.42544% for 91- to 180-day loans; and 4.48794% for 181- to 360-day loans. This followed a fresh rate hike introduced by the United States Federal Reserve last March.

Margins for yen-denominated borrowings also trended higher to 1.96967% for one to 90-day loans, 2.03217% for 91- to 180-day loans, and 2.09467% for 181- to 360-day loans. — Melissa Luz T. Lopez