Results of December 2025 survey on credit terms in euro-denominated securities markets

The December 2025 survey of the ECB’s Securities Financing and OTC Derivatives (SESFOD) indicates that credit terms and conditions are expected to tighten in the first quarter of 2026, especially for hedge funds.

There was a broad-based increase in funding demand, with financing rates rising across nearly all collateral types. Compared to the previous year, market-makers’ ability to act in stress conditions improved for derivatives but declined for debt, asset-backed, and convertible securities.

Between September and December 2025, price and non-price credit terms remained largely stable, with slight easing driven by market liquidity, competition, and counterparty financial strength. Expectations for the first quarter of 2026 point to some tightening, particularly for hedge funds, with more pronounced tightening in price terms than non-price terms.

Funding demand increased across all collateral types, notably for domestic and high-quality government bonds. Financing rates and spreads rose for all collateral except asset-backed securities. Funding amounts and maturities increased for debt-secured funding, excluding convertible securities.

Regarding OTC derivatives, credit terms remained broadly unchanged, though there was a slight increase in valuation disputes, especially for commodity derivatives.

Survey participants reported minor changes in market-making activities for 2025, with slight increases in derivatives and debt securities. For 2026, respondents expect increased activity across all instruments. A majority indicated good or moderate ability to act as market-makers in stress conditions, with improvements for derivatives but declines for debt, asset-backed, and convertible securities.

All previous survey data are available on the ECB Data Portal. The December 2025 SESFOD results, detailed data, and guidelines are accessible on the ECB website along with other SESFOD publications.

The SESFOD is conducted quarterly, covering changes over three-month periods ending in February, May, August, and November. The December 2025 survey collected qualitative data from 26 large banks, including 14 euro area banks and 12 outside the euro area, on changes from September to November 2025.