Money markets us debt supply from foreign banks rises

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* Foreign financial CP supply highest in 6 months * Appetite for foreign CP seen for outside euro zone * Three-month Libor unchanged after rising Wednesday By Richard Leong NEW YORK, May 10 Foreign banks and financial companies issued more U.S. commercial paper in the latest week, suggesting some of them have no trouble raising dollars despite nagging worries about Europe's debt crisis spiraling out of control, analysts said on Thursday. The latest rise in the short-term debt from overseas banks and financials firms likely came outside of the euro zone, whose future is doubt once again after weekend elections brought leadership changes in France and Greece, analysts said. "Prior to this week, we knew the euro zone was going to be an issue," said Mike Lin, director of U.S. funding at TD Securities in New York. Foreign financial companies' commercial paper outstanding rose to its highest level in six months. It increased $16.8 billion in the latest week to $177.7 billion on a seasonally adjusted basis, according to Federal Reserve data released on Thursday. Foreign bank issuance of commercial paper rose for a third consecutive week on non-seasonally basis. It rose by $1.8 billion to $132.5 billion. Lin said the rise in foreign financial commercial paper supply likely stemmed from appetite among money market investors seeking to diversify away from the euro zone. He reckoned the issuance increase likely came from perceived safe-haven regions of Japan, Canada, Australia and Scandinavia. "We are still having decent volume (on commercial paper), but it's pretty concentrated in a few geographic regions," Lin said. Data showed large German, French and Dutch banks could still sell short-term debt to money market funds. U.S. prime money market funds increased their euro-zone debt holdings by $14 billion to $205 billion in April, J. P. Morgan Securities said in a report on Wednesday. Earlier in London, Libor on three-month dollars stabilized at 0.46685 percent. It was fixed higher for the first time in 10 sessions on Wednesday. Libor is a rate benchmark for $360 trillion worth of financial products worldwide.