Bank Lending Stress Rises After First Weekly Increase Since June
An indicator of stress in short- term, unsecured euro loans between banks rose, extending its first weekly increase since June.
The difference between the euro interbank offered rate and overnight index swaps, known as the Euribor-OIS spread, was 11.2 basis points, or 0.112 percentage point, at 10:02 a.m. in London, according to data compiled by Bloomberg. That’s up from 10.4 on Oct. 26, which signalled the least stress in lending markets since August 2007.
The cost for European banks to borrow in dollars increased. The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 25 basis points below Euribor, from minus 24 at the end of last week.
The one-year basis swap increased to 25.5 basis points below Euribor, from minus 24.5.
The European Banking Federation’s euro overnight index average, or Eonia, of unsecured lending deals increased to 0.089 percent from at 0.086 percent. The Eonia swap, an estimate of average overnight borrowing costs over the next three months, was at 9.1 basis points, from 9 basis points yesterday.
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