RSS feedecb
’On balkanisation and credit claims
We missed Willem Buiter’s comments on “additional credit claim” ECB collateral when they were published on Monday. But since it’s pretty strong stuff from the Citigroup economist…
(Might need a key.
Another piece of the LTRO puzzle
The point has been made before that rising deposits at the ECB do not, (repeat, not) indicate that banks are “hoarding liquidity”.
Here’s Guy Debelle, assistant governor at the Reserve Bank of Australia,
Bored of the eurozone crisis?
So too is the ECB, clearly.
Enjoy, or complain to your Euro MP.
c.c. Daily Mail news desk
Abstract:
At the 2010 FIFA World Cup in South Africa, many soccer matches were played during stock market trading hours,
LTRO credit claims, not so carry trade
Just as “free lunch” appears in a Bloomberg headline on the ECB’s three-year liquidity…
Here’s a pair of interesting analyst reactions to Friday’s details on eurozone central banks’ rules for accepting additional credit claims.
Those haircut-heavy credit claims [updated with more haircuts]
Update — apologies for a rather disorganised (and long) post… but we’ve finally gained information from all seven eurozone central banks who’ll accept additional credit claims under the ECB’s new rules…
Here be Draghi, on ECB collateral [updated]
Some interesting points about the ECB’s expansion of the collateral it will accept for funding at February’s three-year LTRO, plus a bit on its Greek bonds, from ECB President Mario Draghi at pixel time…
European repo has been contained!
From Icap’s latest repo weekly report:
See that? That’s Italian general collateral trading more-or-less in line with the Eonia OIS curve after a good few months of haywire behavior. What’s more,
Greece’s biggest holdout, dealt with? [updated]
Goodbye to one massive FT Alphaville bugbear, anyway? An interesting story from Stephen Fidler of the WSJ/DJ FX Trader:
The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value,
Global liquidity fail — the role of skewed incentives
Presenting, one of the best accounts of how the current crisis came about that we’ve read to date.
It comes courtesy of Benoît Cœuré, member of the executive board of the ECB, and should be required reading for every player in financial markets,
LTRO-ing, with Magnus
Intesa Sanpaolo’s chief executive says he’ll use ECB funds to buy Italian bonds…
BBVA sells the first senior unsecured bond to be issued by a Spanish bank since October… (like Intesa a few weeks ago.
Imagine no recoveries in bank senior debt
Seems kinda churlish to throw this out amidst the biggest bank bond rally since 2009. But…
We believe investors should assume a low (possibly 0%) recovery rate on most senior unsecured bank bonds
In practice,
Who tapped the LTRO, cont’d [updated]
Just one name today, but hopefully it rams home why banks are using the ECB’s three-year liquidity. From BBVA’s latest results:
Making use of the new lending facility provided by the European Central Bank (ECB),
Breaking up is hard to do — but here goes, anyway
From Jonathan Tepper, economist, chief editor of Variant Perception and co-author with John Mauldin of Endgame: The End of the Debt Supercyle…
A thirteen point guide to breaking up the euro.
Those countries that opt to remain in the euro will,
Let there be credit claim collateral… just not everywhere
Turns out that not all the national central banks of the European System of Central Banks (ESCB) are so keen on widening collateral criteria, especially the idea of taking on more bank loans (tweaking the eligibility of credit claims) in exchange for central bank lending.
Crunch de crédit continu (et collateral)
There’s a new ‘how is sovereign debt hurting you?’ question in the European Central Bank’s regular bank lending survey…
… which presents an interesting break-out of collateral concerns .
Just under one-third of banks said that sovereign pressures had affected funding between December and January.
Revised ECB liquidity number du jour
More ECB LTRO stuff, this time from Credit Suisse’s European banks team:
Furthermore, there has been a lot of commentary surrounding the potential utilisation of the second tranche of 3yr funds due on Feb 29th,
LTRO smackdown
Dan Davies takes us to task over the ECB’s three-year liquidity to banks, and catalysing the (unsecured) funding market:
Oops. It’d be nice to be wrong. Lloyds — which didn’t borrow from December’s LTRO incidentally — really isn’t Barclays,
Bilaterally — yours?
The FT’s James Mackintosh recently pointed out an interesting provision in the loan agreement Greece has with its bilateral official creditors – its fellow eurozone states.
They are entitled to require Greece to pay the whole loan back immediately if the country defaults on private bondholders.
Climbing down a Greece decision tree
Via Barclays Capital, this one comes with instructions:
The further right we end up in this decision tree, the harder the credit event will likely be perceived by the market and the bigger the additional precautionary fire-fighting measures will likely be to face contagion…
On a negative deposit rate at the ECB
Before this month’s ECB interest rate policy decision, a number of analysts had come to think that the ECB might be inclined to adjust its so-called rate corridor.
The corridor is best explained as the difference between the discount rate (or deposit rate) and the central bank’s most punitive rate,
There are official creditors, and there are “official” creditors
The unstoppable force…
“If the level of Greece’s privately held debt is not sufficiently renegotiated, then public creditors, holders of Greek debt, will also have to participate in the financial effort,” Lagarde told journalists in Paris.
Margin call, the LTRO movie
Another reason why we don’t like the meme of viewing the ECB’s three-year liquidity as (or in any way analogous to) “quantitative easing” for sovereigns:
Mark-to-market risks remain key
As the LTRO is a repo transaction the ECB takes in collateral in order to back any loans.
Death sanitised through credit
Or, what kind of risk the ECB’s three-year LTROs are putting on.
Two charts — click to enlarge:
They’re from the European Central Bank’s latest monthly bulletin, which actually came out last week.
The LTRO rally is young, says SocGen
Or, taking the “three-year LTRO = QE” meme and running with it. Two charts via Societe Generale’s cross asset team on Monday:
Related links:
LTRO covers BNP, Credit Ag and SocGen 2012 funding –
Collateral squeeze as strong as ever, Icap says
Oh dear. So much for the big Draghi LTRO helping out the Eurozone collateral crunch.
According to Icap’s latest repo makret report — and remember they operate the dominant electronic repo platform in Europe,
The ECB creates artificial life
The credit team at Citi came out with a note on Friday entitled “Artificial life and Dolly the Sheep”. It contained this rather eye-catching analogy:
It’s been the dream of Sci-Fi fans for decades. 18 months ago US scientists announced they had created a living cell controlled entirely by synthetic DNA.
Just to be clear about those those ECB deposits…
From the ECB’s January monthly bulletin (our emphasis):
All in all, the increase in liquidity, as measured on the settlement day of the three-year LTRO, was equal to €193.4 billion. The record amounts allotted in the three-year LTROs to the banking system mechanically increased the quantity of base money in circulation and will therefore be reflected,
Who did, and didn’t, tap the three-year LTRO
Nice and big table (click to enlarge) from Morgan Stanley analysts, who are very much in the ‘it’s all about refinancing bank debt’ camp on the purpose of the three year ECB liquidity. More on that in a bit…
The ECB has a communications problem
The Fed isn’t the only central bank grappling with flaws in its communications policy amid problems with its traditional policy transmission mechanisms.
Everyone is well aware of the ECB’s non-traditional measures to this point: