BLBG:European Banks’ Dollar Funding Costs Decline in Money Markets
The cost for European banks to borrow in dollars fell to near the lowest level in six 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 70 basis points below the euro interbank offered rate at 8:56 a.m. in London, from minus 73 yesterday, data compiled by Bloomberg show. The cost dropped to 69 below Euribor last week, the lowest since Aug. 5.
The one-year basis swap was little changed at 60 basis points less than Euribor. A basis point is 0.01 percentage point.
A measure of European banks’ reluctance to lend to one another fell. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, fell to 75 basis points in London, the lowest since Oct. 21, according to data compiled by Bloomberg. That compares with 76 yesterday.
Lenders reduced overnight deposits at the European Central Bank, placing 503 billion euros ($661 billion) with the Frankfurt-based ECB yesterday from 511 billion euros on Feb. 3.
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
