TLTRO Takeup Expected To Be Limited

On Thursday at 1030BST/1130CET, the ECB publishes TLTRO III.5 allotment results. Last week, the ECB announced that voluntary TLTRO early repayment was E10.9bn, with TLTRO II.2 maturity = E6bn. Consensus for takeup tomorrow is between E50-100bn net; by comparison at the prior operation in June, 742 institutions took up E1.31trn.

• JPM expects that "with the ECB deciding to keep the funding conditions unchanged, we continue to expect a net allotment of around E50-100bn at this operation."
• Commerzbank believes "neither the subdued repayments announced on Friday nor the leverage ratio relief on Thursday will change the needle and stick with our view of a E60bn allotment. This could still be sufficient to take excess liquidity above E3trn - and keep bullish Euribor dynamics intact ahead of year-end."
• Danske expects E50-100bn takeup, but "market implications are expected to be relatively muted as the excess liquidity in the euro area is gradually rising and currently stands at EUR3trn. Even a EUR100bn take-up may not have a material market impact. However, if we reach EUR200bn, there will be downward pressure on e.g. Euribor"
• Daiwa expects "significantly" lower takeup than in June; likewise BofA expects "a low net takeup".
• Per BBG, low-to-high estimates range from E10bn (Barclays) to E200bn (NatWest).