Rediscount facility borrowings drop in November

PHILIPPINE BANKS availed of fewer loans under the central bank’s rediscount facility in November, which comes at a time of ample liquidity in the financial system.

Borrowings under the peso rediscount window of the Bangko Sentral ng Pilipinas (BSP) totalled P171 million last month, lower than the P370 million banks took out in October. The amount, however, surged from just P14 million availed in November 2016, according to central bank data.

Lenders borrow from the BSP’s rediscount facility so that they can meet their short-term funding needs, in keeping with the central bank’s duty as lender of last resort.

The credit window lets banks submit promissory notes from outstanding client debts as collateral to acquire fresh money supply. The cash can then be used to grant more loans or service withdrawals.

As of end-November, total peso rediscount borrowings hit P1.144 billion, well below the P10.755 billion availed during the comparable year-ago period.

Around 92.3% of the amount has been allotted by banks for a fresh wave of commercial lending, the central bank said. Some 5.9% was extended for services, 1.3% for housing credit, and 0.5% for production activities.

The rediscount availments have been sustained for the fourth straight month since new borrowing rates took effect. Since July 21, a uniform rate has been imposed for availing of rediscount loans after the BSP shut down the special window for thrift, rural, and cooperative banks.

Only two rates are imposed for short-term peso borrowings secured by banks: 90-day loans are priced at a 3.5625% rate, while 180-day credit lines carry a 3.625% margin. This is computed based on the BSP’s overnight lending rate at 3.5% plus term premia.

On the other hand, credit windows for foreign currencies remained untapped as of November as yields continued to climb.

Rates for dollar loans rose to 3.48738% for 90-day loans; 3.54988% for 91- to 180-day loans; and 3.61238% for 181- to 360-day loans. Higher returns will also be imposed for yen-denominated borrowings at 1.984% for one to 90-day loans, 2.0465% for 91- to 180-day loans, and 2.109% for 181- to 360-day loans.

The movements on foreign currency loans mirror rising global yields, as market players anticipate another rate hike from the United States which is expected to trigger higher interest rates across financial markets.

Central bank officials have said that there remains ample liquidity in the Philippine financial system, which does away with the need to avail of rediscount loans as players hold enough cash to support day-to-day transactions. — Melissa Luz T. Lopez