June 25, 2015 / 4:55 PM / 4 years ago

MONEY MARKETS-U.S. repo rate jumps to near 3-month high

* Greece debt worries stoke quarter-end cash move

* U.S. Fed awards $100 bln in 7-day term reverse repos

By Richard Leong

NEW YORK, June 25 (Reuters) - The borrowing cost on a key source of overnight loans for Wall Street jumped to its highest level in nearly three months on Thursday as traders scrambled to ensure funding in advance of the end of the second quarter.

Anxiety about the bumpy negotiations between Greece and its creditors intensified the clinching of cash among banks and dealers to finance their trades and loans, analysts said.

“It’s hard to tell when and how it will end,” Gennadiy Goldberg, an interest rate strategist at TD Securities in New York said of the Greek debt discussions. “You don’t want to leave things to chance.”

The interest rate on overnight repurchase agreements was last quoted at 0.19 to 0.28 percent, compared with 0.17 percent late on Wednesday, according to ICAP.

This was highest level since March 31 when it reached 0.58 percent.

In the repo market, banks and dealers pledge Treasuries and other securities as collateral to money market funds and other investors in exchange for cash.

Without a deal by the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros since 2010, is set to default on a crucial repayment to the International Monetary Fund next Tuesday.

Traders worry a Greek default would roil financial markets worldwide, making investors less willing to lend in the $5 trillion repo market.

As the end of a quarter approaches, cash investors tend to reduce repo lending and shift money into safer products such as Treasury bills and the Federal Reserve’s term fixed-rate reverse repurchase agreements.

Banks and dealers end up paying higher repo rates as quarter-end approaches as fewer investors are willing to lend.

Earlier Thursday, the Fed awarded $100 billion in seven-day reverse repos to 49 bidders. (Reporting by Richard Leong)

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