Something is cooking in the interbank market. The Euribor 12 monthswhich measures interest on wholesale loans at that term, goes up this Wednesday until 2,416%7.8 basis points (pb) more than Tuesday and the highest level since January 22, 2009. Shorter maturities have also increased significantly. The Six-month Euribor reached 1.76%, while that of three monthsmore related to corporate financing, increased to 1.11%.
In its rapid escalation, the fastest in history, it already is 50 basis points above dthe level of last September 8 when the European Central Bank (B.C) decided to raise interest rates from 0.5% to 1.25% in an unprecedented move.
Precisely, investors point out that the decoupling between the official rate and the interbank rate which has widened its spread to 120 basis points, three times the normal taking as reference the previous rate adjustment scenarios, according to financial sources.
After this new take, the monthly average of the 12-month Euribor in September stood at 2.08% and further widens the spread compared to last year to 257 basis points, a record in the historical series. It will be the average that will be used as a reference for the calculation of mortgage payments and loan reviews that are now being renewed.
Energy risk for banks
Although the evolution of Euribor rates is closely linked to official rates, loans between banks are affected by risk and insolvency forecasts. In the current energy crisis, the The ECB has advised entities to start reviewing risk associated with companies dependent on energy sector.
The Chairman of the Supervisory Board of the ECB, Andrea Enriaurged to review the quality of the credit assets, the revaluation of insurance and the increase in financing costs. Experts predict supply cuts and production shutdowns this winter that could affect credit quality for both the industry and energy operators.
The German government announced on Wednesday the nationalization of gas company Uniper, which sold Russian gas from Nord Stream 1. The deal was carried out at a rock-bottom price (1.7 euros per share) after Berlin launched a package bailout worth 19,000 million euros which completely diluted its shareholders.
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