European Central Bank publishes SESFOD survey showing largely stable euro-denominated wholesale credit terms

The European Central Bank published the September 2025 results of the Eurosystem’s Survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets (SESFOD), covering June to August 2025. Overall credit terms were reported as largely unchanged, with a very minor net tightening concentrated in banks and dealers and non-financial corporations driven mainly by non-price terms, while price terms eased slightly for hedge funds, insurance companies, investment funds and sovereigns. Balance sheet availability was the primary source of tightening pressures for both price and non-price terms, followed by counterparty financial strength, with general market liquidity conditions and competition offsetting these pressures for price terms. Responses were collected from 26 large banks (14 euro area banks and 12 banks headquartered outside the euro area). In securities financing, most measures (including maturities and haircuts) showed little change, while financing rates/spreads rose for government bonds and equities and demand for funding increased across most collateral types; collateral market liquidity improved slightly for government bonds and asset-backed securities but edged down for corporate bond and equity markets. In non-centrally cleared OTC derivatives, initial margins, credit limits and most documentation terms were broadly steady, while valuation disputes increased for interest rate and credit derivatives and fell for commodities. For the fourth quarter of 2025, respondents expected no change in overall credit terms across counterparty types, alongside a very slight easing of price terms for most counterparties excluding banks and dealers and hedge funds, and no net change in non-price terms.