Credit terms offered in both the provision of finance that is collateralised by euro-denominated securities and over-the-counter (OTC) derivatives markets became somewhat less favourable for all counterparty types over the three-month reference period ending in May 2016. Credit terms are expected to tighten further over the coming three-month reference period between June and August 2016.
Regarding the provision of finance that is collateralised by euro-denominated securities, survey respondents indicated less favourable non-price terms such as the maximum amount and the maximum maturity of funding against many types of collateral. However, respondents reported more favourable price terms such as financing rates/spreads for many types of collateral, in particular when government bonds had been used as collateral, except for high-yield corporate bonds and convertible securities.
Market liquidity for the underlying collateral (as opposed to the securities financing market itself) deteriorated further on balance for almost all types of euro-denominated collateral covered in the survey, following the deterioration in liquidity and market functioning that had been reported in the previous four securities financing and OTC derivatives markets (SESFOD) surveys. [...]
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