European Sovereign Debt Crisis

Forecast demand for ECB loans scaled back
By Mary Watkins and Patrick Jenkins in London
Next week eurozone banks will have another see to dip their finger in the honey pot when the European Central Bank embarks on its second three-year loan bear to the regions lenders
Round one of the ECBs longer-term refinancing operations (LTRO) in December, which saw 523 banks from across Europe borrow €489bn, averted a credit crunch and had a dramatic affect on market sentiment.
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The flood of cash into the financial system allowed banks to refinance debt and pre-fund for 2012. Analysts say the first tranche of the LTRO was signifi enkindlet because it bought banks time to reduce debt and assisted a recovery in capital markets that has paved the look for a healthy flow of new bond issues.
scarcely as the markets digest the agreement struck with Greece this week, attention is unfirm toLTRO 2. How large the take-up is and where the cash is being deployed, nearly say, will offer an indication of the fragility of the European banking system.
For the moment, LTRO money has opened the market for proper bond issuance and so European banks have a possibly brief period of time where they can use their wee-wee-out-of-jail-free card, says Matthew Pass, head of European financial institutions at RBC Capital Markets in London.



Most banks realise that plot of land the window is open, they have got to take that funding because it is only a question of time before it closes again.
People involved in the process say expectations of a vast take-up of three-year money have subsided in recent weeks, as banks have shget that they can issue unsecured debt in the commercial markets under their own steam. Both Italys Intesa SanPaolo and Frances Société Générale, which had been frozen out of markets in the second half of finally year, recently issued five-year bonds. That kind of market normalisation is exactly the essence policymakers hoped the ECB scheme would have.
A month ago, some experts were predicting...If you want to get a full essay, order it on our website: Ordercustompaper.com



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