Rediscount loans hit P14.5B in January

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By Melissa Luz T. Lopez, Senior Reporter

BANKS TAPPED the rediscount window of the Bangko Sentral ng Pilipinas (BSP) as the year opened, with the extra cash meant to support import payments and capital spending.

Peso rediscount loans totalled P14.462 billion in January, coming from the P14.706 billion credit lines secured in December, the central bank said yesterday.

In contrast, lenders did not borrow from the rediscount facility in January 2018.

The BSP’s rediscount window allows banks to get hold of more cash by accepting their collectibles as collateral for short-term credit. The lenders can then use the fresh money supply — either in peso, dollar or yen — to hand out more credit lines for corporate or retail clients and service unexpected withdrawals.

Banks may borrow from the BSP’s rediscount window if their usual supply of cash falls short of client demand. This also allows the central bank to fulfill its duty as lender of last resort.

In a statement, the BSP said bulk of the short-term loans were meant for commercial credits, with 51.6% declared to support import loans.

This comes at a time of a sustained double-digit growth in imports of raw materials and capital goods, which are said to support increased construction activity in the country.

Around 41.96% of the loans were also declared to fund capital asset expenses, followed by trading loans (5.33%) and other services (1.11%).

The higher rediscount borrowings come at a time when market players said they are seeing “tight” liquidity conditions, following a series of interest rate hikes from the BSP last year. Higher benchmark yields made borrowing money more expensive.

However, central bank officials have said that the tightness in money supply may have been temporary, as it came during the seasonal spike in demand for cash during Christmas. BSP Deputy Governor Diwa C. Guinigundo said the eventual return of oversubscription in the weekly term deposit auctions showed that banks are still sitting on excess cash.

Total loan availment reached P71.524 billion in 2018. On the other hand, the dollar and yen rediscount window meant for exporters remained untapped, sustaining a trend observed for the past few years.

For this month, rates for rediscount loans remain unchanged after policy makers voted to keep benchmark yields steady during last week’s rate-setting meeting.

Rediscount rates for peso loans stand at 5.3125% for loans maturing in 90 days or shorter, while those with a 91 to 180-day term are priced at 5.375%. These are based on the 5.25% ceiling of the interest rate corridor plus a premium.

Meanwhile, yields for foreign currency loans went down, tracking movements in global interest rates.

Dollar borrowings will come with a lower rate of 4.7375% for one to 90-day loans; 4.8% for 91- to 180-day loans; and 4.8625% for 181- to 360-day loans, the BSP said.

Rates for yen loans also went slid to 1.91133% for one to 90-day loans, 1.97383% for 91- to 180-day loans, and 2.03633% for 181- to 360-day loans.