Since January 2009, the Ted spread - the spread between the three-month US dollar London interbank offering rate (Libor) and the three-month US Treasury bill yield, seen as a measure of the perceived risk of interbank lending - has remained roughly constant. After sharp spikes in September and October 2008, the stablity seen this year has been viewed in some quarters as a reflection of improved sentiment on the interbank markets after the large government injections of liquidity late last year.
But, so far, these interventions have failed to bring about a turnaround in the rest of the lending market. The latest survey of bank lending in the eurozone, published yesterday by the European Central Bank, found 43% of banks reported tighter credit standards on business loans in the first quarter. This made it the seventh consecutive quarter in which banks tightening credit have outnumbered those loosening it - the last period where the reverse was true was the second quarter of 2007, just before the onset of the credit crisis.
The latest monthly US bank lending survey, released earlier this month, found total loan origination fell by a median of 2.2%, and loans to commercial and industrial borrowers by a median of 12.7% in February. Mortgage and home loan origination rose as borrowers took advantage of lower interest rates to refinance existing loans, the Treasury added.
But, according to the Bank of England, which also released a lending survey for Q1 this month, commercial lending rose slightly in the UK in Q1; household lending fell, but both are expected to rise in Q2, an improvement the bank links to increased availability of funds. Although default rates have risen, spreads have risen to match them on both household and corporate loans, the bank said.