Rediscounting availments steady at P41 billion in 4 months

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday that total availments of rediscounting loans remained steady in the first four months due to higher demand for funds to finance expansion programs of companies.

Data released by the central bank showed that total availments under the BSP’s Peso Resdiscount facility was steady at P41.11 billion from January to April this year from P41.21 billion availed in the same period last year.

About 55.2 percent of the total rediscounting loans availed by commercial, thrift, and rural banks went to commercial credits while 28.2 percent went to other services, 8.9 percent to capital expenditures, 2.7 percent to permanent working capital, and 1.5 percent to housing.

Meanwhile, about 3.2 percent of the total availments under the Peso Rediscount facility went to agricultural and industrial credits.

The BSP added that the availments under the Peso Rediscount Facility excluded the P9-million rediscounting loans granted to micro, small and medium enterprises (MSMEs) affected by tropical storm Ondoy and typhoon Pepeng last year. 

It would be recalled that the BSP’s Monetary Board approved the established an additional P5 billion budget for rediscounting to cover for typhoon-affected MSMEs. The amount was on top of the rediscounting budget of P60 billion.

On the other hand, aggregate availments under the Export US dollar facility amounted to $40.8 million from January to April benefitting 22 exporters.

The BSP said there was no availment under the Export Yen Facility during the period.

The BSP has pegged its peso rediscount rate at four percent per annum under its Peso Rediscount facility for all maturities effective Feb. 1. It has also pegged the rate for loans under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) at 0.28000 percent per annum for its dollar facility and 0.15713 percent per annum for its yen facility.

The EDYRF rediscount rates are based on the respective London inter-bank offered rate (LIBOR) for the last working day of April.

The central bank has slashed key policy rates by 200 basis points from December 2008 to July last year as part of easing measures to boost the country’s slackening domestic economy. This brought the overnight borrowing rate to a record low of four percent from six percent and the overnight lending rate to six percent from eight percent.

The BSP’s Monetary Board decided to keep its key policy rates unchanged at record lows last April 22 but continued unwinding its accommodative stance by phasing out more liquidity enhancing measures due to clearer signs of increasing momentum in economic recovery.

The BSP lifted several liquidity-enhancing measures introduced starting November of 2008 to cushion the impact of the global financial meltdown.

Last Jan. 28, the BSP raised the rate on a short-term lending facility to four percent from 3.5 percent marking the start of an exit strategy with the tweaking of exiting liquidity enhancing measures.

Measures included the reduction of the peso rediscounting budget from P60 billion to P40 billion and further to P20 billion; the restoration of the loan value of all eligible rediscounting papers to 80 percent from 90 percent of the borrowing bank’s credit instrument; and the revival of the non-performing loan (NPL) ratio requirement of two percentage points from 10 percentage points above the latest available industry average NPL for banks wishing to avail of the rediscounting facility.

Economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) see the country’s domestic output as measured by the gross domestic product (GDP) recovering to between 2.6 percent and 3.6 percent this year after slackening to 0.9 percent in 2009 due to the full impact of the global financial crisis.

The BSP earlier rechanneled the P5-billion budget previously earmarked to assist bank customers adversely affected by tropical storm Ondoy and typhoon Pepeng last year to help clients affected by the El Nino weather conditions.

The central bank issued Memorandum Order M-2010-007 laying down the guidelines for the regulatory relief for rural and cooperative banks in areas affected by the El Niño phenomenon.

The package of relief measures allows the use of the unavailed portion of P5-billion budget exclusively for the restructuring of rediscounting obligations of banks and new availments of banks intended as rediscounting relief for bank customers adversely affected by the typhoons last year.

The rules also gives affected rural and cooperative banks up to May 31 to apply for a special rediscounting line and up to Dec. 31 this year to avail themselves of such line. The loans availed by affected the affected banks under the special rediscounting lines are subject to renewal based on the original term of the loans but not to exceed five years.