Rediscount loans climb in September

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REDISCOUNT LOANS availed by banks surged in September at a time of tighter money supply, which came ahead of another rate hike from the Bangko Sentral ng Pilipinas (BSP).

Banks took out P10.599 billion in loans from the central bank’s peso rediscount window, up from the P9.41 billion worth of short-term credit secured in August and surging from the P133 million borrowings in September 2017.

The BSP’s rediscount window arms banks with extra cash by posting their collectibles from clients as collateral. The banks may use the fresh money supply — expressed in the peso, dollar or yen — to grant more loans for corporate or retail clients as well as service unexpected withdrawals.

The September loans brought the nine-month rediscount tally to P30.623 billion, well above the P603 million handed out during the comparable year-ago period.

In a statement, the central bank said a fourth of the amount was extended for commercial credits, while the bulk went into other forms of credit. Broken down, 28.2% of the sum went into capital asset expenses, 15.8% for permanent working capital, while 30.9% was lent for other services. Production credits took a 0.03% share, while housing received 0.02%.

The bigger availments came ahead of another rate increase worth 50 basis points (bp) during the central bank’s Sept. 27 policy meeting, which was their fresh response to surging inflation and to temper further price expectations. This pushed the benchmark yields to the 4-5% range, while the main policy rate stood at a nine-year high at 4.5%.

Following the fresh tightening move, rediscount rates also climbed to 5.0625% for loans with a maturity of up to 90 days, while those with a 91 to 180-day term came with a 5.125% yield which took effect Oct. 1.

On the other hand, the exporters’ dollar and yen rediscount window stood untouched so far this year.

For October, rates for dollar borrowings logged higher to 4.39838% for one to 90-day loans; 4.46088% for 91- to 180-day loans; and 4.52338% for 181- to 360-day loans, the BSP said yesterday.

Yields imposed on yen-denominated loans went lower to 1.94517% for one to 90-day loans, 2.00767% for 91- to 180-day loans, and 2.07017% for 181- to 360-day loans. These represent the spreads which banks must pay to the BSP for securing the short-term credit lines as lender of last resort. — Melissa Luz T. Lopez