The LIBOR (London Interbank Offer Rate) for three month US dollar loans fell for its 16th consecutive session overnight to its lowest point (2.86%) since the collapse of Lehman Brothers on September 15, indicating credit markets are finally beginning to thaw in earnest. Concerted central bank intervention, massive liquidity injections, government-led bank bailouts, coordinated interest rate cuts and the US Federal Reserve's enormous commercial paper buying programme appear finally to be having an effect. The 3 month LIBOR to Overnight Interest rate spread fell 14 basis points to 225 basis points overnight. Bloomberg reported that interest rates on commercial paper issuance in the United States fell to their lowest level since August 8. Data released overnight showed that commercial paper outstanding in the United States rose last week for the first time since Lehman's collapse, thanks in large part to the US Federal Reserve buying 9% of all paper during the week. * This article was first published exclusively yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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