TIPS Liquidity Seen Boosted From Repo Role

A change in the repo market could make TIPS more liquid.

  • 06 May 2005
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A change in the repo market could make TIPS more liquid. The Fixed Income Clearing Corporation, which handles the back office operations of liquid securities, recently added TIPS to the pool of securities eligible to fulfill a general collateral obligation. As a result, dealers can now interchangeably deliver Treasuries, TIPS, agencies or mortgage-backed securities as collateral in the repo market.

The change could narrow the spread between the TIPS repo rate and the rate for nominal Treasuries, according to Gerald Lucas, chief Treasury and agency strategist at Banc of America Securities. TIPS have become established as a fixed-income product and have gained enough liquidity to join the pool, according to Ed Leitheat, FICC's product manager of government securities.

Of course, the number of nominals far outpaces the number of TIPS available: The TIPS repo rate is 3-5bps higher than Treasuries just because of that, Lucas explained. But because of the change the spread to Treasuries could narrow by one to two basis points and trading volumes increase, he said.

  • 06 May 2005

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 353,377.35 1327 9.07%
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3 Bank of America Merrill Lynch 316,098.84 1095 8.11%
4 Goldman Sachs 234,493.12 778 6.02%
5 Barclays 226,573.92 880 5.82%

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1 HSBC 34,312.86 161 6.57%
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3 Bank of America Merrill Lynch 31,113.25 94 5.96%
4 BNP Paribas 27,479.75 167 5.26%
5 SG Corporate & Investment Banking 23,982.83 136 4.59%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 19,536.02 78 8.89%
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3 Citi 15,750.21 93 7.17%
4 UBS 15,208.47 58 6.92%
5 Goldman Sachs 13,499.48 73 6.15%