Libor-Ois Spread

Haven’t talked the Libor-Ois spread in months maybe years but focus is starting to return to this metric of Credit conditions in the U.S. Economy first though A definition or two :

During the recession, the LIBOR-OIS spread, the difference between the rate for an unsecured loan and the risk-free rate shot up, indicating worsening credit conditions in the economy.(Investopedia)

Quarterly graph of Libor/Ois spread it is at highest since GFC

The LIBOR-OIS spread represents the difference between an interest rate with some credit risk built-in and one that is virtually free of such hazards. Therefore, when the gap widens, it’s a good sign that the financial sector is on edge(investopedia)

Daily Chart Libor-OIS spread

So with Credit Conditions worsening, especially in the oil sector lets look at who is Loaning Money to these companies and how the they are fairing today.Below is Graph of credit default swaps of the High Yield Financial Companies

XLF financial ETF -9% today AS worriesa bout loan defaults weigh

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