Euribor rates at lowest since March 2011

Eurozone bank-to-bank lending rates fell to their lowest in nearly 11 months on Thursday with the European Central Bank poised to offer more 3-year loans in February. The cost of borrowing dollars for three months in the unsecured interbank market eased after US Federal Reserve Chairman Ben Bernanke said on Wednesday the central bank was ready to offer the economy additional stimulus after announcing it would likely keep rates near zero until at least late 2014.
Ample central bank liquidity in global financial markets has improved sentiment towards riskier assets even as private creditors and Greece have struggled to reach a deal on debt swap talks, key for the country to avoid a messy default
But banks have remained reluctant to lend to each other. "(The Fed verdict) underpins in general the theme that central banks are committed to low rates, are committed to providing the market with liquidity en masse," Norbert Aul, rate strategist at RBC Capital Markets said.
Eurozone bank-to-bank lending rates fell to their lowest since March 2011 to 1.142 percent, and down from 1.149 percent in the previous session. The spread between the 3-month Euribor rate and Eonia overnight rates was 77 basis points, down from 79 basis points the day prior.
"The next major event (is) the 3-year LTRO, that's our focus," a trader said. "We are focusing on what the ECB are trying to achieve at the front-end." The European Central Bank is expected to allot 263 billion euros to banks at its second three-year tender in February, half what they borrowed last month, according to Reuters this month. But the wide range of forecast signalled high uncertainty among trader predictions.
"The Euribor fixings has continued to go lower and lower and I think this has given us a green light to stay very bullish at the front end of the European curve, Euribor futures, ie we think that yields are going to be lower for longer like the United States," the trader said.
The three-month dollar Libor rate - a key interbank rate for borrowing dollars - fell to 0.5531 percent from 0.5566 percent. Banks borrowed 3.47 billion euros from the ECB overnight, down from 3.62 billion the day prior. They deposited 484.13 billion euros at the deposit facility overnight, down from 485.79 billion euros the day prior.