Foreign banks in US wary after funding costs rise
Following jump in Libor/OIS spread, many US entities continue borrowing from parents
"It's very difficult to predict this market" - Danske's treasury head, Christoffer Møllenbach
Global banks are so far resisting the urge to change their funding strategies in response to US tax changes and widening Libor spreads, which have made it broadly more expensive to fund their US operations whether locally or by borrowing from abroad.
A glut of Treasury bill supply in the first quarter caused the US dollar Libor/overnight index swap basis (Libor/OIS) – a proxy for bank funding costs – to reach levels not seen since 2009. At the same time, US tax reforms implemented on January 1
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