ECB: Results of the December 2018 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD)

Feb 01 2019

31 January 2019

  • Credit terms tightened for all counterparts, but non-price terms offered to hedge funds remained stable
  • Banks and dealers increased resources and attention dedicated to managing concentrated credit exposures
  • Liquidity and general trading conditions for underlying collateral deteriorated slightly, following improvement recorded in previous survey
  • Reduction in market-making activities was particularly visible for other government, sub-national and supra-national bonds, high-quality financial corporate bonds and derivatives

Credit terms offered to almost all counterparties, both in the provision of finance collateralised by euro-denominated securities and in over-the-counter (OTC) derivatives markets, became somewhat less favourable between September 2018 and November 2018. Non-price terms for hedge funds were the only component that remained stable. Looking ahead, a small net percentage of respondents now expect price terms to ease for most counterparty types. Non-price terms are expected to remain stable, although some tightening is expected for insurance companies, non-financial corporations and investment funds. Survey respondents further increased the resources and attention they dedicate to managing concentrated credit exposures both to central counterparties and to banks and dealers.


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