Relief for bank funding costs

Wednesday, 20 June 2012

Over the past week, CDS prices (the cost of insuring a five year bond against default) have corrected significantly on easing European worries:

This pricing suggests the banks could now issue unsecured debt in the range of 160bps over swap, which is a long way down from last week.

Of course, over the longer term the picture remains downright terrifying with a monster up trend still intact since the GFC began in 2007:

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.