ECB huge 1yr Financing operation matures 1st July....

inspector_monkfish

11:53 29Jun10 - ECB's Nowotny says not considering new 12-month loans

* Nowotny says ECB not considering new 12-month funds
* Long-term exit plans remain on track
* Bond market nervousness should be short-lived


VIENNA, June 29 - The European Central Bank is not considering offering banks another batch of 12-month loans to replace those expiring this week, Governing Council member Ewald Nowotny said on Tuesday.

The ECB's first-ever one-year loans -- part of the emergency support it put in place at the height of the financial crisis -- expire on Thursday and are not set to be renewed, although the ECB is providing alternative extra borrowing opportunities.

"The decision not to renew the 12-month tender is part of a long-term exit strategy," Nowotny said at a news conference with International Monetary Fund officials.

"The ECB has started this long-term exit strategy and this is something we are following. In the meantime there have been special actions taken, but the basic long-term exit strategy is valid."
Nowotny was asked about a report in the Financial Times that Spanish banks were furious the 12-month scheme would not be rolled over and wanted the ECB to offer more longer-term loans.

The Austrian central bank chief said banks would have plenty of opportunity to borrow extra funds to smooth the repayment of the 12-month loans, pointing to upcoming offers of three-month and six-day liquidity.

"The ending of the 12 month tender is accompanied by a number of actions to ensure that there will be no liquidity squeeze," he said.
"One always has to observe things very carefully but for the time being I don't see any need to change the strategy we engage in."

The ECB holds a three-month tender on Wednesday which many in the market expect will be tapped as banks scramble to pay back the one-year funds. Expectations are that 210 billion euros will be allotted at the offer.

DEBT MARKET NERVES TRANSITORY
Nowotny also played down a renewed rise in euro zone bond rates, saying it was due at least in part to forced sales of Greek government bonds after ratings agencies downgraded the debt to below investment grade.

Peripheral euro zone yield spreads widened on Tuesday with Portuguese and Irish spreads over Bunds hitting their highest since May 10 when the ECB began buying certain peripheral debt.

Spanish credit default swaps pushed to a record high.

"Unfortunately we have to expect quite a bit of nervousness in the bond markets this week," he said.

"Many index funds will be forced to sell their Greek bonds in the next days. That might create some nervousness in these markets. But this is a very specific situation. This is no indicator for a long-term development."

JonnyBravo

What's the betting the markets work themselves into such a froth that eventually they do give out the 12-month sweeties?

inspector_monkfish

10:17 30Jun10 ECB ALLOTS EUR131.933 BLN AT 91-DAY REFI TENDER AT FIXED 1%
10:17 30Jun10 ECB: 171 BIDDERS AT 91-DAY REFINANCING TENDER
10:27 30Jun10 ECB Allots EUR131.933 Bln At 91-Day Refi Tender At Fixed 1%

FRANKFURT--The European Central Bank said Wednesday that it allotted EUR131.933 billion of funds at a 91-day refinancing tender, at a fixed rate of
1%.

It said 171 banks bid at the tender, which it conducted under a "fixed-rate,
full allotment" procedure, essentially allowing banks to borrow as much as they
wanted.

The volume is significantly less than many market participants had expected.
Forecasts of up to EUR250 billion had been circulating ahead of the tender,
although forecasting volumes at the ECB's longer-term tenders has been
notoriously difficult over the last year.

inspector_monkfish

10:32 30Jun10 -ECB lends 131.9 bln euros in 3-month funds

FRANKFURT, June 30 - The European Central Bank lent banks 131.9 billion euros ($161.4 billion) in three-month funds on Wednesday, below expectations, as banks face the repayment of close to half a trillion euros in 12-month funds.
The relatively low demand should help ease concerns about bank finances which have rocked stock markets this week.

ANALYST COMMENT
"All in all it is a positive signal for the European banking system as a whole. This is, in my view, why we see the reaction in the market... some of the fear is being priced out of the fixed income universe. Nevertheless, still 170 banks see it as a viable option to get financing from the ECB at 1 percent for only three months, so we're not out of the woods."

RATE STRATEGIST COMMENT
"132 billion is much lower than the market expected and it looks like the main refi rate is going to be used a lot in the coming weeks. I guess that banks want to manage their liquidity more carefully. Euribors are discounting higher rates on the prospect of less excess liquidity."

GERMAN BONDS TRADER
"Some market participants had been suffering from nerves in the last few days, there was a flight to quality. The fact that banks's demand for funds was not as high as many had feared has had a calming influence."

ECONOMIST COMMENT
"It's a little bit below our expectations. Such low demand means there is a risk of interest rates rising higher.
"It's far better (for banks) than it would have been if we had a situation of very strong demand, so it's quite a satisfying result."

ECONOMIST COMMENT
"It's definitely a good sign and means there is still some interbank lending occurring within the European money market, and that's it's not just a vertical relationship between banks and the ECB.
"We still have to wait for tomorrow to get the full picture."

lemonjelly

Are things still nervous like yesterday then?

purch

So much for the Spanish Banks being 'desperate' for Funds then.

From what I had heard any number under EUR 250/300 Yards should have been positive, so this result appears on face value to be pretty good news for the EUR markets.

inspector_monkfish

purch wrote: »

So much for the Spanish Banks being 'desperate' for Funds then.

From what I had heard any number under EUR 250/300 Yards should have been positive, so this result appears on face value to be pretty good news for the EUR markets.

yes, its been well received news
maybe a sign that some banks arent as desperate as has been made out

inspector_monkfish

all rosey again in the markets !!!

Euphoria1z

FTSE lost 157 points apparantly. closed at 4914

inspector_monkfish

Euphoria1z wrote: »

FTSE lost 157 points apparantly. closed at 4914

whys it closed at 1pm?

lemonjelly

inspector_monkfish wrote: »

whys it closed at 1pm?

Dinner-time?:o