Banks' Addiction to ECB Cash May Stymie Bond Sales: Euro Credit
Feb. 8 (Bloomberg) -- The European Central Bank may be making it harder for the region’s banks to revive bond sales by giving them access to unlimited cheap cash.
Issuance of senior unsecured euro debt by banks fell about 35 percent to 51.4 billion euros ($67 billion) in the six months ended Feb. 6 from the same period a year earlier, data compiled by Bloomberg show. The average relative yield on the debt is 307 basis points, up from about 200 before the region’s sovereign debt crisis worsened in June, according to Bank of America Merrill Lynch’s EUR Corporates, Banking index.
The ECB pumped 489 billion euros into the banking system in December through the so-called longer-term refinancing operation to head off a potential credit crunch. The central bank is planning another injection of three-year loans on Feb. 28. Participation by lenders may total a further 1 trillion euros, according to Marchel Alexandrovich, an economist at Jefferies International Ltd. in London.
“The LTRO isn’t so much a backstop for the banks, it’s more of a front-stop,” said Jonathan Cooper, a senior consultant at Finadium, a Concord, Massachusetts-based research and consulting firm. “Three years is a long time and the risk is that the banks will be pretty addicted by the time it ends.”
Unsecured debt is becoming less attractive to investors because banks are having to pledge more assets as collateral for ECB loans. An increase in issuance of covered bonds, notes secured on mortgages or public-sector loans and guaranteed by the issuer, is also depleting the collateral pool.
Covered Bonds
Benchmark issuance of covered bonds in the single currency was 93.7 billion euros -- almost double the sales of senior unsecured debt -- in the six months through Feb. 6, after reaching 127 billion euros a year earlier, Bloomberg data show.
cash backed loans - News
In this scenario, the modeled average cash flow decline is 7.9% from, generally, trailing 12-month (TTM) second and third quarter 2011. The largest component of Fitch's base case loss expectation is a mezzanine loan (3.1%) secured by interests in a
At closing, CPUK Finance will on-lend the proceeds from the issuance of these notes to borrowers via intercompany loans, which are intended to fully amortize from Center Parcs' operating cash flows. Center Parcs is a family-oriented all-year provider
Unsecured debt is becoming less attractive to investors because banks are having to pledge more assets as collateral for ECB loans. An increase in issuance of covered bonds, notes secured on mortgages or public-sector loans and guaranteed by the issuer
By Andrew Restuccia - 02/06/12 02:36 PM ET The Energy Department stands to recover more than 70 percent of a taxpayer-backed loan to an energy storage company that filed for bankruptcy last year. Rockland Capitol agreed Monday to acquire Beacon Power
That momentum continued as automakers sold cars and trucks in January at the fastest pace since the US government's "cash for clunkers" program in August 2009, according to Autodata Corp. Capital One boosted new-vehicle loan originations by 35 percent
Unsecured Business Loans | Amane Cernoticias
In our beginner’s help guide to Unsecured Business Loans we’re going to break up the phrase into its component parts and discuss every one of them subsequently. You’ll want to understand were speaking about loans that are disbursed once approval is done, rather than lines of credit which can be approved, however are merely readily available for use. Hopefully in the end of today’s discussion you will have clear picture in your head of methods loans with this type function. To begin with the definition of unsecured in unsecured loans talk about the belief that the borrowed funds doesn’t have collateral backing it. As an example, if you decide to purchase a car then this automobile is utilized to have Business Loans . This really is to cancel out the higher chances that bank and other bank takes in supplying you with the credit. While there is always legal recourse to try and buy your cash back, it really is safer if your loan is backed by a thing that may be taken without further legal permission or intervention. They may be Unsecured Loans without any backing capital in it for example the make small business loans we discussed. They’re designed for small enterprises which can be businesses with revenues below a specific threshold. Finally there once disbursements of funds to never be mistaken with lines of credit that may be used again and again.
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