ECB’s Overnight Facility Unused for First Time in 16 Months… is Eurozone Crisis Easing?

Data issued today by the European Central Bank (ECB) shows that banks took no money from its overnight loan facility on 9 January; the first time that the facility had gone unused since 28 August 2011 according to a report by Reuters.

The news came ahead of the first monthly meeting of 2013 for both the ECB and the Bank of England (BoE) to set monetary policy.

Although seen as too early to mark a trend, overnight borrowing from the ECB has been low since the start of 2013 and, if maintained, would seem to indicate an easing of the stresses in the interbank market as banks are able to secure funding more easily from alternative sources to the ECB, which charges 0.75 percentage points than normal ECB funding for its instant access facility.

A further positive development for the eurozone came with news that Spain has successfully concluded a bond auction, raising a total of €5.8bn against the Spanish Treasury’s maximum target of €5bn on significantly lower yields.

The offering comprised €3.397bn of two-year bonds at a maximum yield of 2.587%; €1.95bn of five-year bonds, at a maximum yield of 4.033% against 4.769% in November 2012; and €470m of 13-year bonds at a maximum yield of 5.569%, down from 6.218% in July 2011.

Spain’s offering followed the sale, on 8 January, of €2.5bn of 2017 bonds by Ireland’s National Treasury Management Agency (NTMA) in its first syndicated sovereign deal since the European Union (EU) and the International Monetary Fund (IMF) announced a bailout programme for the country in December 2010.

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