BLBG:European Banks’ Dollar Funding Costs Hold Near Eight-Month Low
The cost for European banks to borrow in dollars held near the lowest in eight months, according to a money-markets indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was unchanged at 50 basis points below the euro interbank offered rate at 8:39 a.m. in London, data compiled by Bloomberg show. The measure reached minus 49.5 on March 26, the cheapest cost since Aug. 1.
The one-year basis swap was little changed at 45 basis points less than Euribor. The cost of the currency swap has declined from 98.5 basis points below the benchmark at the end of 2011. A basis point is 0.01 percentage point.
The Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, was little changed at 41 basis points, the lowest since Aug. 1. The measure of banks’ reluctance to lend to one another has declined from 95 basis points at the start of the year.
Lenders increased overnight deposits at the European Central Bank for the second day yesterday, placing 786 billion euros ($1 trillion) with the Frankfurt-based bank, up from 783 billion euros on April 2.
To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net
