ECB Extends Financing to U.S., GBP and JPY Collateral

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The European Central Bank (ECB) published details of its latest extension to collateral eligibility requirements, which will allow U.S dollar, U.K. sterling and Japanese yen collateral to be used in its monetary operations.

The extension will come into action on Nov. 9. Royal Bank of Scotland analysts said in a report today that the relevant haircuts are 16% for U.S. dollar and GBP securities and 26% for those denominated in JPY.

In June, the ECB announced that it would consider for repo eligibility; auto, leasing, consumer finance and CMBS loans that are senior and have a current rating of triple-B minus for eligibility.

According to a  September report published by the Association for Financial Markets in Europe (AFME), 1H12 placed securitization issuance is down approximately 20%, with issuance at €42 billion, down from €53 billion the prior year. Placed covered bond issuance is down 33% year‐on‐year through the end of August 2012, with year-to-date issuance volume of €164 billion, down from €246 billion recorded at the same point last year.

Funding provided by new placed issuance activity in both of these sectors is declining. AFME said in the report that central bank liquidity initiatives may be one factor in this decline.

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