LTRO repayments larger than expected (Barcelona) - The European Central Bank announced on Friday that 278 Eurozone banks would repay 137.2 billion euros borrowed in December 2011 under the 3-year Long Term Repo Operation (LTRO). The first early paybacks would take place on January 30.

This is a larger amount of early repayments than the market consensus of 100 billion euros and approximately 30% of the December 2011 loans, “but it continues to leave open the question of how much will be repaid when the next €529.5bn becomes eligible for repayment on February 27th (to be announced Feb 22),” as Richard Kelly, Head of European Rates and FX Research at TD Securities points out. The expert predicts that it is “likely to be less than today’s figure, perhaps around the €75-100bn range for a total repayment of €200-225bn, slightly about our initial €150bn estimates.”

The greater-than-expected repayment caused the euro to break decisively above the 1.3400 mark and reach an 11-month high of 1.3463 before easing a tad.