ECB Overnight Deposit Facility Usage Climbs To All Time Record As European Banks Scramble For Cover
Friday's usage of the ECB's overnight deposit facility hit an all time high of €350.9 billion, an increase of €50 billion from the day before, as the panic among Europe's banks exploded on Hungary statement it was about to fail. And even with Hungary now rapidly backtracking, apparently all new to this currency confidence manipulation thing, the rating agencies have now woken up, and as we all know, hell hath no fury like a rating agency scorned that it is a few decades behind the curve (speaking of which, when will Moody's finally hire a replacement to its recently departed global head of sovereign research?). As Reuters reports, Moody's analyst Dietmar Hornung said Monday: "The statements are a credit negative because they bring renewed attention to Hungary's high public and external debts, which, by threatening to drive up interest rates and push down the exchange rate, endanger Hungary's economic recovery." Fitch and S&P followed suit: "David Heslam, director of Fitch Ratings' emerging Europe sovereigns, said the comments would not affect Hungary's funding options but ultimately played into a "key ratings driver" -- its fiscal path. "We are concerned about the fiscal outlook post-elections... Given the high level of debt, there is little room for policy slippage." Standard & Poor's, which has Hungary's ratings at BBB- with a stable outlook, said in a statement: "We will review the government's report on public finances and the government's action plan before we would comment further."
And while the raters continue playing the word game, trying to seem objective without getting ever closer to calling out the Emperor on his nudity, following the money as always presents the best perspective of what is happening. To that end, below it the chart of the ECB's deposit facility usage. No commentary needed as everyone scrambles for cover.