Bonds News

US 3-mo TED spread 236 bps, widest in credit crunch

LONDON, Sept 17 (Reuters) - The difference between the cost of borrowing three-month dollar funds on the interbank market and three-month U.S. Treasury borrowing rates widened on Wednesday to its highest since the credit crisis eupted in August last year.

The so-called TED spread -- the spread between T-bill yields and comparable eurodollar rates, or London interbank offered rates (Libor) -- widened to 236 basis points US3MT=RRUSD3MFSR= from around 220 basis points on Tuesday.

That’s wider than the two previous peaks of around 220 basis points in the 13-month old crisis seen after the initial blowout in August last year and December last year as banks scrambled for cash to bolster their year-end balance sheets.

Even around the time of the demise of Bear Stearns in March this year, the TED spread topped out around 210 basis points, Reuters charts show.