The European Central Bank will price the third instalment of its Targeted Longer-Term Refinancing Operations (TLTRO III) more harshly than expected, it revealed on Thursday. This should keep most banks using market funding. Meanwhile, expectations are rising of another round of quantitative easing, something that would boost prices of bank debt, write Tom Brown, Jasper Cox, David Freitas and Bill Thornhill.
For TLTRO III, the ECB set the interest rate at 10bp more expensive than it was for TLTRO II. Ranging between 10bp above the deposit rate and 10bp above the refinancing rate, it works out currently at between minus 0.3% to (positive) 0.1%.
The terms mean most banks
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