UPDATE 1-Fed finds U.S. dealer financing terms easing

(adds details, background)

WASHINGTON, March 31 (Reuters) – A Federal Reserve survey
of senior credit officers issued on Thursday found more demand
for funding for securities deals and better credit terms from
December through February.

“Overall, respondents … indicated a further easing in
credit terms across different counterparty types and securities
financing transactions over the previous three months,” the
survey said.

The quarterly Senior Credit Officer Opinion Survey examines
conditions in wholesale credit markets where banks are
providing financing to hedge funds and other big investors.

The survey’s focus is different from the better-known
Senior Loan Officer Survey the Fed issues and that measures
lending conditions for households and businesses.

The credit officers’ survey found stronger demand for
funding for all types of securities. By contrast, they said
there was little change in conditions in markets for
over-the-counter derivatives from the prior three months.

The survey included answers from 20 dealers whom the Fed
said “account for almost all the of the dealer financing of
dollar-denominated securities for nondealers and are the most
active intermediaries in OTC derivatives markets.”

Dealers said they eased credit terms, on net, for each
counterparty type covered in the survey. Counterparties can
include dealers, hedge funds, private equity firms, insurance
companies, pension funds and nonfinancial firms.

The survey said that firms like hedge funds that represent
private pools of capital were actively seeking better terms of
credit over the past three months and said terms were likely to
ease further in coming months.
(Reporting by Glenn Somerville; Editing by Padraic Cassidy)

UPDATE 1-Fed finds U.S. dealer financing terms easing