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>That means the bank is absorbing a real loss of 1.5%/year on the deal. (As I understand it) the Eurobor rate is negative (the rate that the central bank lends
by collyw 7y ago
>That means the bank is absorbing a real loss of 1.5%/year on the deal.
(As I understand it) the Eurobor rate is negative (the rate that the central bank lends to the other banks), so its unlikely that the bank are taking the hit directly.
- zajio1am 7y agoEuribor is not a rate that central bank lends to other banks, it is a rate commercial banks lend between themselves. ECB has its own rates (e.g. deposit facility, marginal lending facility for overnight deposits and loans).
- martin_bech 7y agoAs I mentioned somewhere else, these loans, are based 100% on bonds, sold on the open market, so the issuer is not loosing money. The issuer “realkredit selskab” just gets a fee. Who buys the bonds, could be anyone.. banks, pensionfunds, people who need to store money, in an “insured” way.