Home > Views > Blogs > Market Movers > Is There a Need for NYbor?
EMAIL
PRINT
RSS
SHARE
TEXT SIZE:
SHARE
Send a copy to me

Separate multiple email addresses (max 20) with commas.

0/1500

Main
A Sensible Way of Buying Fixed-Incom...   How Economic Illiteracy Could Doom G...
Apr 23 2008 10:31AM EDT

Is There a Need for NYbor?

nyborAre European banks significantly riskier than American banks? Looking at RBS's decision to raise $24 billion in new capital, it certainly seems that way: the move will take RBS's tier-one capital from a normal-for-Europe 4.5% up to a normal-for-the-US 6%.

And so it's maybe not surprising that US interbank borrowing rates are lower than European interbank borrowing rates. The spread at the moment is 4bp, which is significant enough, but Carrick Mollenkamp reports that it could widen further, to as much as 10bp, as Libor continues to widen out to reflect reality rather than wishful thinking.

The inevitable result is that some bright spark (Scott Peng of Citigroup, to be precise) has proposed a "NYbor" measure of US interbank rates. Which is a bit weird, given that the WSJ was able to run its accompanying chart in the first place: clearly someone is already measuring these things. So the idea is clearly that NYbor not be simply used as an indicator of transatlantic spreads - that's something which already exists - but rather as a replacement for Libor. And that seems a little excessive to me.

See more in

Loading...

Add Your Comment

Required fields are marked with an asterisk (*)
Add a comment

Recent Blog Posts

Archive

Previous
Oct
2008
Next


Also in Portfolio.com
Most Read
Most Emailed
Recently Commented