A Federal Reserve Board survey Thursday reported a modest improvement in credit conditions for securities financing transactions over the last three months.
The Fed's Senior Credit Officer Opinion Survey said dealers had "eased somewhat" the credit terms they offered hedge funds, private equity firms and other similar private pools of capital during the most recent reporting period.
Additionally, one-third of respondents "eased somewhat" the pricing terms, such as financing rates.
The Fed said the relaxed credit terms were due in part to more aggressive competition from other institutions, as well as improvement in the financial strength of counterparties and general market liquidity.
The Fed said nearly two-thirds of dealers noted an increase in efforts by private pools of capital to negotiate more favorable price and non-price terms.
The central bank said it anticipates that trend to continue in the next quarter.
"Looking forward over the next three months, one-half of survey respondents, on balance, indicated that they anticipated a further easing of terms for such counterparties," the report said.