It seems that some companies, particularly the double currency of the budget, are seeking to avoid the high cost of their loans, specifically those registered in dollars, by approving financing deals with creditor banks, which guarantee them a reduction in the cost of funds, which witnessed a significant rise during the recent period, with the successive increases in the interest rate on the dollar.
In this regard, responsible sources revealed to Al-Rai that companies, including entities listed on the stock exchange, have recently increased their loans in dinars, in exchange for reducing their debts in dollars, despite their need for liquidity in green currency, indicating that among the list of included financing are facilities amounting to 20 million dinars. The sources stated that these companies have suspended their loans in dollars, as well as their existing and expected financing requests in this currency, in exchange for obtaining loans equivalent to the value in dinars.
According to the sources, it is expected that the movement of active financing in the local currency will include the requests of new borrowers, which raises the question about the reasons that drive local companies to replace the currency of their loans, which basically suits the nature of their investments in dinars?
In principle, it can be said that the budget of many companies was classified until the past weeks with dinar and dollar loans, and the explanation for this is due to the fact that these entities have investments in the local currency, and others in the green currency, which makes their financial statements include financing in both currencies and according to the weight of each investment they have and the need financing.
However, some companies with dual-currency balance sheets have recently moved towards their creditor banks to unify the currency of their loans, so that they are all in dinars instead of dollars, as they stopped their financing, at a time when they requested facilities in dinars.
Perhaps the main reason that tempted the credit policy makers of these companies to unify the currency of their debts in dinars is that the dollar exceeded the interest of the dinar, by about 1 percent, as the discount rate for borrowing in local currency remains at 3.5 percent, compared to 4.25 to 4.5 percent interest determined by the US Reserve Board.
What confirms this is that after depositing new funds denominated in dinars in the accounts of these companies, their officials ask the creditor bank to exchange them for dollars, to provide liquidity in green currency, and thus continue to cover their financing needs according to the scheme without any change, except for achieving additional gains consisting of the interest difference.
Companies, especially those classified by banks as being within the preferred segment with high creditworthiness, can obtain loans denominated in dinars with an interest margin between 1 and 2 percent above the discount rate, and thus the cost of their funds reaches a maximum of 5.5 percent, while it will be on these companies If she obtains a loan in dollars from the same creditor bank, she will pay an interest of 7.5 percent, which makes borrowing in dinars cheaper for her compared to pricing the debt in dollars.
On the banking front, the tendency of some companies to replace their loans in dollars with others denominated in dinars means an increase in their demand for deposits in dinars.
Expectations about the continued implementation of the policy of raising interest in exchange for gradation locally reinforce the strategy of interest in borrowing in dinars, as the expected interest trends motivate it to build financing centers early, taking advantage of current prices, taking into account that it is expected that the “federal” will increase in its upcoming meeting February 1 the interest by half. percent.
Banking sources suggested that banks will continue to demand deposits in dinars at large rates during the coming period, especially by some banks, driven by more than one reason.
The sources indicated that the most prominent reasons that motivate banks to narrow their margin of profitability between their loans and deposits are their need to arrange the scale of their benefits in accordance with the requirements of regulatory standards, explaining that the greater the need, the higher the bank’s request to the limits in which the cost of its loans converges with its deposits.