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Money markets volumes in overnight euro zone lending plunge


* Eonia volumes drop by a third y-o-y in November* Traders note increased activity in longer-term rates* But overall volumes still subdued, euro crisis weighsBy Marius ZahariaLONDON, Dec 4 Euro zone banks have cut their overnight lending to each other in favour of longer-term loans but still lack the confidence to be more active in money markets due to concerns about the bloc's debt crisis. Since the European Central Bank cut the rate on its deposit facility to zero in July, driving overnight Eonia rates to just a few basis points, some banks have opted to lend for longer periods, trying to attract higher interest rates. That led to a drop in overnight volumes, with traders saying the move offset the greater activity in longer-term rates. The fact that overall lending volumes is unchanged indicates there has been no fundamental improvement in the confidence banks have in each other and that lenders are only taking more risk because they want a slightly higher return on their cash.

"It's mostly moving peas on the same plate. Nobody is doing much," a money market trader said. "The whole of Europe is not exactly in equilibrium and that state seems to be quite stable at the moment."He said the ECB's massive cash injections have left many euro zone banks with more liquidity than they need. Their cautious stance makes them hold on to cash rather than lending them to other banks or to businesses. The daily average volumes in trades using the overnight Eonia rate was about 20 billion euros in November, down by a third from the same month of last year, according to Reuters calculations. They have declined from 23.6 billion in October and 26.3 billion in September. Another trader said most of the activity is still in maturities of less than three months, with the rest of unsecured lending largely frozen.

Despite reassurances from policymakers that they will do whatever necessary to save the euro zone, money markets remain closed for many banks in the bloc's lower-rated states. Eonia rates settled at 0.077 percent on Monday. The benchmark three-month interbank Libor rate for euros settled at 0.12714 percent on Tuesday. TRANSMISSION

The low money market rates are not being transferred to the real economy. Banks are not confident of their own market access longer term and therefore not lending to businesses. Loans to the private sector fell by 0.7 percent in October from a year before, the latest ECB data shows. ECB President Mario Draghi proposed a central bank sovereign bond buying programme named OMT, or Outright Monetary Transactions, as a way of better transmitting the bank's ultra-loose monetary policy to the crippled euro zone economy. The idea behind it is to bring down indebted countries' short-term borrowing costs and ease their debt burdens. As long as sovereigns can stay afloat the chances of a banking sector meltdown are reduced. The OMT activation -- pending a request for a bailout from one of the euro zone states, most likely Spain -- is expected to further encourage banks to take more risks in lending markets. But without a reduction in overall euro zone debt levels and more reforms to fix the bloc's underlying economic problems, banks are unlikely to suddenly start lending more to the real economy, analysts say."In case of activation of the programme there might be a slight improvement (in money market sentiment)," Barclays Capital rate strategist Giuseppe Maraffino said. "But it will not be a normalisation of the market. It would all still be based on ECB support. Normal markets function on their own."

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Rpt fitch upgrades semper finance 2006 1 class d & e; affirms semper finan


Feb 13 (The following statement was released by the rating agency)Fitch Ratings has upgraded Semper Finance 2006-1 Ltd.'s class D and E note and affirmed the others and affirmed Semper Finance 2007-1 GmbH's class A1+ to E notes. A full list of rating actions is at the end of this release. Semper Finance 2006-1 and 2007-1 are synthetic securitisations of commercial mortgage loans originated by Hypothekenbank Frankfurt AG (A-/Stable/F1), which are secured by German commercial real estate assets. KEY RATING DRIVERS The upgrade of Semper Finance 2006-1's class D notes to 'A'sf and class E notes to 'BBB'sf, reflects the high credit enhancement provided by the junior notes and the moderate LTV profile. The level of market value decline required to erode the protection, would need to be close to 70% (due to the advance rates below 30%), which is significantly above the level of decline expected in 'A'sf and 'BBBsf' rating stress scenarios for German multi-family assets. The affirmation of the remaining Semper Finance 2006-1 and Semper Finance 2007-1 notes is driven by strong collateral performance and increased credit enhancement available to each class through sequential repayment. As a result of amortisation and repayments, Semper Finance 2006-1's reference pool has reduced to EUR408.5m from EUR1.85bn at closing (or 333 loans from 1,773) and Semper Finance 2007-1's pool to EUR250.6m from EUR1.00bn at closing (or 119 loans from 492). Fitch believes that the risk profile of both reference pools has been stable or improved since the last rating action in May 2013. SEMPER FINANCE 2006-1 The main performance indicators have all improved since the last review of the transaction in May 2013, which is in line with expectations. The weighted average (WA) vacancy across the reference pool has decreased to 7.3% from 7.6% (now at the closing date level) and the WA loan-to-value ratio (LTV) has fallen to 41.4% from 45.3% (64.7% at closing). Over the same period, interest coverage has improved to 4.6x from 4.0x (2.7x at closing) mainly driven by interest rate resets and deleveraging. Through prepayments (accounting for 77% of the repayments to date), portfolio quality has not deteriorated, which supports Fitch's view that negative selection during the transaction term is unlikely to occur. Furthermore, there have been no credit events (defined as bankruptcy of the relevant borrower or failure to pay) since the transaction closed in 2006. Although portfolio concentration has increased (ten largest borrowers now make up 59.2% of the outstanding balance, compared with 36.4% at closing) the quality of the loans is homogenous, with vacancy for the top ten borrowers below that of the overall pool (6.7% versus 7.3% as of December 2013). The increase in concentration does not pose an additional risk to the transaction due to decreasing leverage, resulting in a strong increase in credit enhancement and stable performance. SEMPER FINANCE 2007-1 The main performance indicators have improved due to scheduled amortisation. The reported WA LTV has declined slightly to 64% from 66% since May 2013. At the same time, the portfolio's WA debt service coverage ratio has improved slightly to 1.5x from 1.4x. The portfolio's WA vacancy rate has been stable at around 3.7% during the same period (6.9% at closing).

Another sign of stable performance is the decrease in defaulted reference claims to 7.0% from 7.8% by balance in May 2013. This is likely to increase slightly as the portfolio size decreases. Uncertainty on workout outcome and timing for the 22 currently defaulted loans, is the reason for the Negative Outlook on the class E notes. Nevertheless, Fitch believes that the potential losses from defaulted reference claims are largely offset by the protection offered by unrated junior classes (EUR26.9m) and by the significant portfolio amortisation, which increases credit enhancement and mitigates the risk of collateral underperformance. RATING SENSITIVITIES If the number of credit events in either reference pool increased unexpectedly the Outlook on Semper Finance 2006-1's class E and D notes could be revised and Semper Finance 2007-1's class E notes could be downgraded. A downgrade of the notes' collateral, Lettres de Gage Publiques (A/Stable) issued by Hypothekenbank Frankfurt International S. A. (A-/Stable/F1), would cause a downgrade of the notes to the collateral's new rating, if the note collateral was not exchanged in line with the option in the transaction documents. The rating actions are as follows:

Semper Finance 2006-1 Ltd. :Senior Swap, PIFClass A+ (XS0274873941), PIFEUR56.3m Class A (XS0274874246) affirmed at 'Asf'; Outlook StableEUR111.5m Class B (XS0274874592) affirmed at 'Asf'; Outlook StableEUR92.5m Class C (XS0274874832) affirmed at 'Asf'; Outlook StableEUR83.0m Class D (ISIN: XS0274875052) upgraded to 'Asf' from 'BBB+sf'; Outlook Stable

EUR32.7m Class E (ISIN: XS0274875565) upgraded to 'BBBsf' from 'BB+sf'; Outlook StableEUR7.4m Class F (XS0276247748): not ratedEUR25.1m Threshold Amount: not ratedSemper Finance 2007-1 GmbH :EUR0.03m A1+ (XS0305670647) affirmed at 'Asf'; Outlook StableEUR10.0m Class A2 (XS0305670993) affirmed at 'Asf'; Outlook StableEUR51.8m Class B (XS0305671298) affirmed at 'Asf'; Outlook StableEUR51.7m Class C (XS0305671454) affirmed at 'BBBsf'; Outlook StableEUR49.1m Class D (XS0305672262) affirmed at 'BBsf'; Outlook StableEUR20.3m Class E (XS0305672692) affirmed at 'Bsf'; Outlook NegativeEUR8.7m Class F (XS0305672858): not ratedEUR11.4m Class G (XS0305673070): not ratedEUR6.8m Threshold Amount: not rated var $relatedItems = $('lia "/article/usa-moneymarkets-idUSN9N1D9060"U.S. LIBOR breaches 1 pct for first time since 2009/a/lilia "/article/norway-housing-idUSL5N1EU1V8"UPDATE 1-Norway\'s housing inflation at nine-year high in December/a/li'), $relatedItems = $relatedItems.slice(0,10), relatedBlockLimit = Number('6'), relatedItemsTotal = $relatedItems.length, $paragraphTags = $('#article-text p'), contentParagraphs = 0, minParagraphs = Number("8"); for (i=0; i $paragraphTags.length; i++) { if ($paragraphTags[i].innerText.trim().length 0) { contentParagraphs = contentParagraphs + 1; } } if (contentParagraphs minParagraphs) { setTimeout(function(){ if (relatedItemsTotal relatedBlockLimit) { $('.first-article-divide').append('div class="related-content group-one"h3 class="related-content-title"Also In Financials/h3ul/ul/div'); $('.second-article-divide').append($('.slider.slider-module')); $('.third-article-divide').append('div class="related-content group-two"h3 class="related-content-title"Also In Financials/h3ul/ul/div'); var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $('.related-content.group-one ul'); var $relatedContentGroupTwo = $('.related-content.group-two ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In Financials/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In Financials BRIEF-Sesac says it will be acquired by Blackstone * Sesac says it will be acquired by blackstone; financial terms of transaction were not disclosed Source text for Eikon: Further company coverage: Saudi's Riyad Bank recommends lower cash dividend for H2 2016 DUBAI, Jan 4 The board of Riyad Bank has proposed paying a cash dividend of 0.30 riyals ($0.08) per share for the second half of 2016, Saudi Arabia's fourth-largest lender by assets said on Wednesday. BRIEF-CME Group reached record average daily volume of 15.6 mln contracts in 2016 * Cme group reached record average daily volume of 15.6 million contracts in 2016, up 12 percent from 2015 MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push