Fed Swap Line Tapped Again - Eurobank Funding Concerns Surge After Two Banks Borrow Dollars From ECB
About a month ago, European USD funding concerns came to the fore with a bang after one bank had borrowed $500 million dollars from the ECB in a 7 day operation, indicating that, as had been documented before and after courtesy of a rise in Libor that has yet to see a down day in the last 40, dollar funding is becoming a threshold factor (for at least one bank). Well, today we learn that 3M USD Libor, which just rose yet again to 0.349% from 0.347% (with perpetual outlier Credit Agricole finally caught up by the little Swiss bank that could CSFB, see below) has become a prohibitive funding mechanism yet again, after the ECB just announced that following 3 weeks of quiet, not one but two banks were "forced" to borrow $575 million from the ECB (the most since June 2010) which in turn had to resort to using the Fed's swap line - expect to see the appropriate number in the FRBNY's swap line ledger with the ECB and the Fed's H.4.1 next Thursday when this data is updated on the US side. Basically despite the market rallying on news that the Moody's downgrade of French banks was "better than expected" the truth is that the situation continues to get step wise worse.
And self-reported 3M USD Libor by bank. Not good if one has cash in CSFB: