BLBG:Bank Dollar Funding Costs Rise for 5th Day to Highest Since ’08
The cost for European banks to fund in dollars rose to the highest levels in three years, according to money-market indicators.
The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, was 158 basis points below the euro interbank offered rate at 8:31 a.m. in London, from minus 149 yesterday. The measure is the most expensive on a closing basis since October 2008.
The one-year basis swap was 106 basis points under Euribor, from minus 104 yesterday, data compiled by Bloomberg shows. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe fell. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, was at 93 basis points, compared with 94 basis points yesterday. The difference was 98 basis points on Nov. 3, the widest since March 2009.
Lenders increased overnight deposits at the European Central Bank, placing 281 billion euros ($375 billion) with the Frankfurt-based ECB yesterday, up from 256 billion euros on Nov. 25. That compares with a year-to-date average of 79 billion euros.
To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net
