Soc. Gen. explains why today's NET LTRO was actually lower

Remember consensus was about $300 billion from today's first ever ECB long term repo operation. The actual number looks to have netted out to be below consensus and that may be part of the reason the LTRO rally at 5:30 a.m. EDT was so short lived.

Excerpts from SocGen:

Banks bid for a greater-than-expected €489.2bn, making this the largest-ever single refinancing operation in the ECB’s history.


However this is not the net amount by which outstanding ECB open market operations have increased. Because banks reduced their use of the Main Refinancing Operation (MRO) by €123bn yesterday, and also the use of 3-month long-term refinancing operations (LTROs) by €111bn allotted today, the net increase is smaller.

Moreover, several banks made use of the possibility to swap out of the recent 12m LTRO that was allotted in October into the new 32-month facility (123 out of 181), to the tune of €46bn.

So the next increase in outstanding open market operations is about €210bn