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Bank Pulse: Few TLTRO repayments seen in September
In September, banks will get the chance to pay back some of the cheap loans borrowed from the ECB under the first five tranches of the Targeted Longer-Term Refinancing Operations programme (TLTRO-III, tranches 1-5), set at €1.7 trillion. But with banks able to benefit from a -1% interest rate for another year (until June 2022) we doubt that many will use this early repayment option, or even shift their borrowing to the final tranches. This means banks will continue to use central bank funds abundantly, and thus remain less active in primary bond markets, at least until well into next year. Repaying TLTRO-III.1-5 ... (full story)