February 1, 2013 / 10:17 AM / 5 years ago

Euribor rates rise ahead of second early LTRO repayment

FRANKFURT, Feb 1 (Reuters) - Euribor bank-to-bank lending
rates rose on Friday ahead of the second round of banks' early
crisis loan repayments to the European Central Bank. 
    Markets moved quickly to factor in a steady rise in money
market rates last week after the ECB said that banks would repay
a larger than expected amount - 137 billion euros ($186 billion)
- of the three-year loans they took about a year ago early. 
    Whether they were right to do so depends on whether banks
will keep up the pace with which they return the emergency funds
to the ECB, which they can do now on a weekly basis. 
    A Reuters poll forecast a return of 20 billion euros at the
second repayment opportunity, but forecasts varied widely. 
    In total, the ECB pumped more than 1 trillion euros into the
banking system with two offerings of three-year loans, one in
December 2011 and one in February 2012 as it tried to avert a
credit crunch. 
    The heavy oversupply of ECB cash has long depressed the
rates banks charge each other on lending markets, but a
significant repayment could drive rates higher.
    The first repayment and a lacklustre use of the ECB's
regular refinancing operations this week has driven excess
liquidity in the system down by around 140 billion euros to
around 457 billion euros. 
    Analysts said this the amount was still large enough to
temper upward pressure on rates for time to come. 
    On Friday, three-month Euribor rates,
traditionally the main gauge of unsecured bank-to-bank lending,
rose to 0.234 percent from 0.232 percent.
    The six-month rate increased to 0.380 percent from 0.378
percent and the one-week rate edged higher to
0.084 percent from 0.083 percent. The overnight Eonia rate
 fell on Thursday to 0.080 percent from 0.081 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were lower, with three-month rates
down at 0.47909 percent from 0.48000 percent and one-week rates
falling to 0.32545 percent from 0.33000 percent.
    Euribor rates are fixed daily by the Banking Federation of 
the European Union (FBE) shortly after 0900 GMT.
    * For a table of the latest Euribor fixings for terms of one
week to one year, double click on 
    * For a table of the previous day's fixings of EONIA swap 
rates, which show market expectations for future overnight 
lending rates, double click on 
    * For graphs of historic Euribor and EONIA swap rates, right
click on the links in angle brackets below, and select 'Related 
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    ($1 = 0.7367 euros)

 (Reporting by Frankfurt newsroom)

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