BLBG:Europe Banks’ Dollar Funding Cost Falls to Lowest in Four Months
The cost for European banks to borrow in dollars declined to the lowest in almost four months, according to a money-market indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 89 basis points below the euro interbank offered rate at 9 a.m. in London. That’s the lowest cost since Sept. 16, 2011 and compares with minus 93 basis points yesterday.
The one-year basis swap was 80 basis points less than Euribor, from 81 yesterday, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe fell to the lowest in almost seven weeks. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, fell to 92 basis points from 93 yesterday. That’s the lowest since Nov. 24, 2011.
Overnight deposits at the European Central Bank rose to a record, as lenders parked 486 billion euros ($621 billion) with the Frankfurt-based ECB yesterday, exceeding the previous high of 482 billion euros on Jan 9.
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
