Dealers threaten to charge for 0% CSA floors

One supranational that recently signed a collateral agreement was warned of FVA charges if it wanted to insert a 0% floor on the interest payable

Fears that the euro overnight index average (Eonia) would fall into negative territory have played a part in recently negotiated derivatives collateral agreements with sovereign and supranational end-users, but have resulted in very different outcomes. In one case, dealers warned inserting a 0% floor – meaning a collateral poster would not have to pay interest – could make a client's derivatives more expensive, by creating additional funding burdens for bank counterparties.

Eonia is the rate