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BSP adjusts rediscount yields following rate hike

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Bangko Sentral ng Pilipinas (BSP) — BW FILE PHOTO

RATES for the central bank’s peso rediscount window have been adjusted upward following the Monetary Board’s decision to raise interest rates last week.

In a statement, the Bangko Sentral ng Pilipinas (BSP) announced that yields under the rediscount facility have been raised to reflect higher benchmark rates set by the monetary authority during their May 10 meeting.

Effective yesterday, loans maturing in 90 days or lower are charged a 3.8125% rate while 180-day credit lines carry a 3.875% spread.

The changes reflect the 25 basis points adjustment in policy rates, which was the first tightening move from the BSP in nearly four years. The rediscount rates are computed based on the BSP’s overnight lending rate — which is now at 3.75% — plus term premia.

The BSP raised key interest rates last week given the view that inflation has spread to cover more basic goods and services. The move is also seen to manage inflation expectations among market watchers, and should help temper price increases in the coming months.

The rediscount window allows banks to acquire fresh money supply from the BSP by posting their loan collectibles from clients as their collateral. The cash — which may come in the peso, dollar or yen — can then be used to grant more loans or service withdrawals, depending on the bank’s needs.

Rediscount borrowings totalled P7.651 billion as of end-April. Half of the loans secured were used for capital asset expenditures, while 42.4% has been extended for commercial credits. Credit was also extended for permanent working capital, services, housing and production, the BSP said in a statement.

On the other hand, the foreign currency rediscount window stood untapped during the first four months of the year.

For May, spreads for dollar-denominated loans stand at 4.36294% for 90-day loans; 4.42544% for 91- to 180-day loans; and 4.48794% for 181- to 360-day loans. This trended higher from the previous month’s margins as global interest rates maintain its climb.

Yields on yen-denominated borrowings also trended higher to 1.96967% for one to 90-day loans, 2.03217% for 91- to 180-day loans, and 2.09467% for 181- to 360-day loans, which will be the rates imposed for the entire month. — Melissa Luz T. Lopez