ECB’s LTRO Goes Better Than Expected

June 30th, 2010 by Belisarius

The ECB biggest ever liquidity facility – EUR 442 billion one year maturity is coming due tomorrow. To reduce the strain on the banks, ECB introduced 3 month LRTO (Long-Term Refinancing Operation) which banks could use to refinance the maturing facility.

The market estimate for the LTRO size was EUR 220 billion – EUR 250 billion.

The ECB just announced the results of the operation. Apparently the banks rolled-over (only) EUR 131.9 billion.

Screen 1. LTRO Allotment

Source: Bloomberg

Whether this points to improving liquidity in European banking sector or the “good” banks just used cheaper market financing and the “bad” ones borrowed from the ECB  remains to be seen.  I would go for latter.

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This entry was posted on Wednesday, June 30th, 2010 at 5:07 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

3 Responses to “ECB’s LTRO Goes Better Than Expected”

  1. persistentone Says:
    June 30th, 2010 at 6:03 pm

    Do we know who borrowed from this facility?

  2. Belisarius Says:
    July 1st, 2010 at 12:42 am

    No, unfortunately ECB doesn’t report that, which is kind of understandable because nobody would want to lend to the facility users.

  3. ECB’s 7-Day Liquidity Tender Erases Yesterday’s Optimism On European Banking Sector Liquidity | Tainted Alpha Says:
    July 1st, 2010 at 5:13 am

    […] yesterday’s post: The ECB biggest ever liquidity facility – EUR 442 billion one year maturity is coming […]

 
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