BANKS SECURED bigger loans under the central bank’s peso rediscount window in May to fund more commercial lending and asset purchases at a time of higher borrowing costs.
Total availments under the peso rediscount facility reached P1.266 billion last month, latest data from the Bangko Sentral ng Pilipinas (BSP) showed. The amount doubled from the P615 million in credit secured by lenders in April.
The BSP’s rediscount window allows banks to secure additional money supply by posting their collectibles from clients as their collateral. The cash — which may come in peso, dollar or yen — can then be used to grant more loans or service unexpected withdrawals, depending on the bank’s needs.
As a result, total rediscount borrowings reached P8.917 billion for the first five months of the year, well above the P15 million availed during the comparable period in 2017.
Nearly half of the loans were acquired to finance capital asset spending, which accounted for 44.17% of the total, the central bank said. Meanwhile, borrowings for commercial credits also took a 43.87% share of the rediscount availments.
Additional cash secured by banks were lent to fund activities in services (6.49%), permanent working capital (5.39%), housing (0.06%) and production (0.02%), the BSP said in a statement.
The bigger borrowings came just as yields for the rediscount window climbed to reflect higher benchmark interest rates set by the BSP during their May 10 policy meeting.
Effective May 15, loans maturing in 90 days or lower are charged a 3.8125% rate while 180-day credit lines carry a 3.875% spread. The rediscount rates are computed based on the BSP’s overnight lending rate — which is now at 3.75% — plus term premia.
These changes reflect the 25 basis point hike in key rates, which was the first tightening move from the BSP in nearly four years. Policy makers raised rates last month given the view that inflation has spread to cover more basic goods and services, with the move seen to temper price increases in the coming months.
Meanwhile, the dollar and yen rediscount facilities remained untouched as of end-May, sustaining a trend since the previous year.
Yields for dollar-denominated credit lines even dropped in June compared to the previous month. For June, margins for dollar loans stand at 4.32125% for 90-day loans; 4.38375% for 91- to 180-day loans; and 4.44625% for 181- to 360-day loans.
On the other hand, spreads on yen borrowings rose anew to 1.98183% for one to 90-day loans, 2.04433% for 91- to 180-day loans, and 2.10683% for 181- to 360-day loans, which will be the rates imposed for the entire month. — Melissa Luz T. Lopez