BLBG:Banks’ Dollar Funding Costs Fall for Second Week to 8 Month Low
The cost for European banks to borrow in dollars fell for a second week to the lowest in more than eight 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 little changed at 48 basis points below the euro interbank offered rate at 8:45 a.m. in London, data compiled by Bloomberg show. The measure has fallen for two weeks from 54 basis points on April 6 to the cheapest cost since Aug. 1.
The one-year basis swap was little changed at 55 basis points less than Euribor. 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. The measure of banks’ reluctance to lend to one another was 40 basis points, the lowest since Aug. 1.
Lenders cut overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 746 billion euros ($981 billion) with the ECB from 757 billion euros the day before.
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
