WHEN THE EURO was introduced in January 2000, 10-year German swap spreads initially went as wide as –70 basis points before correcting; they have been simmering at around –5bp to –8bp ever since. Then, late last year, they began to widen again, reaching –23bp at the time of writing. Is this a short-term phenomenon, or the start of a fundamental shift in the cost of funding in euros?
Hans den Hoedt, global head of public sector debt at ABN Amro, sees a trend.
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