Borrowings from BSP’s rediscount window increase at end-December

MORE LENDERS tapped the central bank’s rediscount facility in December as total loans surged from the previous year, data from the Bangko Sentral ng Pilipinas (BSP) showed, even as the foreign currency window remained untapped during the second semester.

Peso rediscount loans hit P10.767 billion by end- 2016, posting an increase from the P10.755 billion tallied in November.

The year-end figure soared from the P437 million in loans which banks availed of in 2015, although bulk of the funds was borrowed back in April ahead of the election season.

Banks can avail of loans from the BSP’s rediscount window in order to meet their short-term liquidity needs by using promissory notes from outstanding client loans as their collateral. These loans mature in different tenors, ranging from three months to a year.

Philippine banks went back to using the rediscount facility in August, following a threemonth halt since May just as the BSP migrated to an interest rate corridor (IRC) regime.

The shift to the IRC saw lower borrowing costs, as the central bank trimmed the policy rate to 3% from 4% effective June 3. The policy rate is used in computing the peso rediscount yield plus a premium.

Lower interest rates for the peso rediscount window took effect on July 25.

As of end-December, bulk of the peso loans or 75.8% were extended to capital expenditures, permanent working capital, other service activities, and housing, the central bank said in a statement. Commercial loans accounted for 24% of the total, while production credits took a 0.2% share.

For January, the rates for the Rediscount Window I covering universal and commercial banks stand at 3.5625% for 90-day loans and 3.625% for 180-day loans, coming from the 3.5% overnight lending rate plus a premium. These rates were significantly lower than the previous 6% repurchase rate as basis under the old monetary policy settings.

Meanwhile, yields for thrift, rural, and cooperative banks under the Rediscount Window II remain at 3% for 90-day loans, 3.0625% for 180-day loans, and 3.125% for 360-day loans.

Despite the surge in peso rediscount loans, the BSP’s dollar window was left unused since June 2015 with the total still at $10.4 million, higher than the $700,000 incurred a year ago. No yen-denominated debts were made during the entire year.

Borrowing rates for dollar loans went higher this January to 2.99789% for 90-day loans; 3.06039% for 91- to 180-day loans; and 3.12289% for 181- to 360-day loans.

Yields under the yen rediscount facility also went up to 1.95343% for one to 90-day loans, 2.01593% for 91- to 180-day loans, and 2.07843% for 181- to 360-day loans to reflect adjustments in the London Inter- Bank Offered Rate, which stands as the international benchmark. •