In a sign that credit market conditions have improved, the Bank of Canada says that the term purchase and resale agreement (PRA) that matures on June 26 will not be renewed.

The Bank of Canada announced today that it will not renew the $1 billion term PRA maturing later this week. “This decision reflects the continuing improvement in market conditions since the end of April, including funding conditions out to three months,” the central bank said in a release.

The bank said that measures of bank funding costs remain well below those in a number of other major currencies. “The results of recent term PRA operations, including the narrow spread between the high and low yields accepted, the wide range of securities used in the operations, and the contraction in the spread between the average yield received and the OIS rate, are consistent with this assessment,” it added.

The bank noted that it remains committed to provide liquidity in support of the efficient functioning of financial markets as needed. The case for further operations, including a decision regarding the July 10 term PRA maturity, will be reviewed in light of conditions in financial markets, it concluded.