BANKS took additional loans from the central bank’s rediscount window in November, boosting money supply to service bigger capital expenses and commercial lending.
Peso rediscount loans totalled P9.642 billion during the month, lower than the P16.553 billion incurred back in October, the Bangko Sentral ng Pilipinas (BSP) said yesterday. Still, the amount was higher than the P171 million availed in November 2017.
The BSP’s rediscount facility provides an avenue for banks to get hold of more cash by posting their collectibles as collateral for short-term borrowings. The banks can then use the fresh money supply — either in peso, dollar or yen — to hand out more loans for corporate or retail clients and service unexpected withdrawals.
The November availments brought the year-to-date tally to P56.818 billion, which surged from the P1.144 billion secured during the comparable period in 2017.
In a statement, the BSP said more than half of the loans were used to support capital asset expenses, while roughly a fifth was handed out for commercial credits.
Other rediscount loans funded other services (17%), permanent working capital (8.5%), as well as production and housing needs.
Central bank officials previously said that market players may have chosen to tap the rediscount window to append their money supply at a time of tighter liquidity in the local financial markets.
The bigger rediscount loans also came ahead of the Christmas season, which usually sees a spike in demand for cash amid the merriment.
For December, rates for rediscount loans rose anew to reflect a 25 basis point (bp) increase in benchmark rates during the BSP’s Nov. 15 meeting. The “proactive” rate hike marks the fifth straight tightening move this year, which brought benchmark yields higher to a 4.25-5.25% range.
As a result, rediscount rates for peso loans went up to 5.3125% for loans maturing in 90 days and below, while those with 91 to 180-day terms are priced at 5.375% since Nov. 19.
The Monetary Board will hold their eighth and final policy review on Thursday, with economists widely expecting them to keep rates steady.
On the other hand, the dollar and yen rediscount windows for exporters remained untouched as of end-November, sustaining a trend seen the previous year.
For December, yields on dollar borrowings are higher at 4.73613% for one to 90-day loans; 4.79863% for 91- to 180-day loans; and 4.86113% for 181- to 360-day loans, the central bank said.
Meanwhile, rates for yen loans dropped anew to 1.8845% for one to 90-day loans, 1.947% for 91- to 180-day loans, and 2.0095% for 181- to 360-day loans. These are the interest rates levied by the BSP to banks securing short-term credit lines, which track movements of global yields. — Melissa Luz T. Lopez