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Treasury Repo Rates Surge

At close of Q1, financing cost more relative to unsecured lending than at any other time since October 2012, but rate swing is expected to be temporary.

By Liz Capo McCormick, Bloomberg | Updated on March 31, 2015

The rate for borrowing and lending Treasuries surged as banks reined in collateral lending to shore up balance sheets and those needing financing at quarter-end were forced to pay higher prices.

The peak level Tuesday for financing Treasuries overnight in the repurchase-agreement market, relative to unsecured lending rates, reached the widest since July 2009, according to Barclays Plc. The average cost for this funding, known as general collateral repo, averaged its highest in the morning trading since October 2012, according to ICAP Plc.

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