LONDON (MNI) – The Bank of England’s third Stg5 billion Extended
Collateral Term Repo facility auction saw very weak demand, with only
Stg1.5 billion allocated at a minimum clearing spread of 25 basis points
over Bank Rate.
Demand for the monthly ECTR auctions has been weak since the June
launch, with each auction for the minimum Stg5.0 billion amount. In the
July auction only Stg4.175 billion was allocated and now a mere Stg1.5
billion.
The BOE announced it was activating the ECTR on June 15, just ahead
of the June 17 Greek legislative election, at a time when fears were
high of liquidity shortages as a result of the euro area crisis.
The ECTR Facility is, in the BOE’s words, “designed to respond to
actual or prospective market-wide stress of an exceptional nature.”
The BOE has said it intends to hold an ECTR auction at least once a
month, normally on the third Wednesday of each month, until further
notice.
The following table shows the history of ECTR auctions so far
(source: Bank of England).
Clearing
Operation Amount Spread
Operation Term Amount Allocated Bps Over
Date Stg mln Stg mln Bank Rate
20/06/2012 6 Month 5000.0 5000.0 25
18/07/2012 6 Month 5000.0 4175.0 25
15/08/2012 6 Month 5000.0 1500.0 25
– London newsroom: 00 44 20 7862 7491; e-mail: drobinson@marketnews.com
[TOPICS: M$$BE$,MTABLE]