LCH Clearnet Ltd., Europe’s biggest clearing house, raised the extra deposit it demands from clients to trade some Italian government bonds, a day after increasing charges for most Spanish bonds.
The margin needed for Italian securities due in seven years to 10 years will be increased to 9.5 percent from 8.3 percent, according to a statement on LCH Clearnet’s website today. The rate was boosted on all Italian debt due from two years through 15 years, the statement showed.
Italian Prime Minister Mario Monti is implementing spending cuts and measures to spur growth as he seeks to reduce Europe’s second-biggest debt burden and avoid becoming the fifth euro-bloc nation to request international aid. Spain will receive funds for its banks that may reach 100 billion euros ($127 billion), following rescues for Greece, Ireland and Portugal.
The margin needed for Spanish securities due in 10 years to 15 years will be increased to 14.7 percent from 13.6 percent, according to a statement on LCH Clearnet’s website yesterday. The rate on Italian securities of similar maturity was set at 12 percent, from 11.45 percent, the company said today.
The yield on Italy’s 10-year bond rose to 6.34 percent on June 14, the highest since Jan. 20. It fell 15 basis points today to 5.77 percent. Spain’s equivalent-maturity bond yield climbed to a euro-lifetime high of 7.29 percent two days ago, sliding to 6.74 percent today.
An increase in the margin requirement reduces the amount of cash banks are able to borrow using the government bonds as collateral in so-called repurchase operations, dimming their appeal, and meaning holders need to commit more of the securities to get the same size of loans.
The changes for Italy and Spain will come into effect from the close of business tomorrow, LCH Clearnet said.