ECB survey finds credit terms easing for fourth straight quarter

The ECB’s September survey found that overall credit terms eased slightly for every type of counterparty between June and August, mainly through pricing changes. It was the fourth consecutive quarterly survey to report an easing. Non-price terms moved differently: they tightened slightly for hedge funds, eased for banks and dealers, and were unchanged for other counterparties. The survey drew responses from 26 large banks, including 14 based in the euro area. [1]

Demand for securities financing backed by most types of collateral increased, led by equities. A net 27% of respondents reported higher demand for equity-backed funding; that is a measure of survey responses, not a 27% rise in funding volume. At the same time, financing rates or spreads rose for the most-favoured clients across all collateral types, while haircuts — discounts applied to collateral — fell for most bond types and asset-backed securities. [1]

For non-centrally cleared over-the-counter derivatives, banks reported slightly lower initial margin requirements for foreign-exchange, interest-rate, equity and several credit products. They also reported more valuation disputes for several derivatives, particularly credit derivatives. [1]