With the global reform effort at pointing...>

EURIBOR: With the global reform effort at pointing at benchmarks, the European

Money Markets Institute is now looking at developing a hybrid Eonia benchmark

replacement as hopes to a fully-transacted benchmark have failed as volumes

faded and concentrated into only a few banks.

- Renuka Fernandez at Nomura writes "we expect Eonia reform to be brought

forward exerting downward pressure on the fixings and upward pressure on the

forward Eonia/Euribor spreads". 

- While the spot Eonia-Euribor basis has been declining gradually as excess

liquidity has risen because of QE, Fernandez argues that "forward spreads have

remained consistently higher - with the peak spread seen 4y forward. We see

potential for the front forward spreads to widen given the risk of reforms being

brought forward. In line with this, we are biased to 4y1y-2y1y Euribor-Eonia

basis spread tighteners."