FXStreet (Barcelona) – Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, notes that the ECB has announcement to add the assets of state-owned infrastructure companies to the list of permitted QE purchases…..an insurance against potential Greece turmoil?
Key Quotes
“In the context of worsening economic conditions due to Greece and the potential for turmoil if Greece votes “No” on Sunday, it was interesting to hear that the ECB has announced that it will add state-owned infrastructure companies’ assets to the list of permitted purchases under its QE program. The expansion of potential assets will reinforce the speculation that the ECB may be struggling to fulfil its asset-buying plan and may eventually add corporate bonds to permitted assets.”
“Certainly it is notable that since ECB Executive Board member Benoit Coeure stated that the ECB would front-load purchases ahead of the illiquid holiday period during July and August, there has been little evidence of a pick-up in the pace of buying. Purchases have averaged around EUR 12bn per week of public sector assets and EUR 3bn of ABS and Covered bonds combined (since 9th March).”
“That said, while there is no evidence of front-loading since Coeure spoke, the ECB may argue that it is already ahead of schedule anyway. This is the seventeenth week since the public sector program began with EUR 194bn bought to last Friday. It’s an 82-week program meaning at the current run-rate buying would total EUR 992bn at the end – more than what’s required to hit the EUR 1.14trn when ABS and Covered bonds are included. We estimate the current run-rate in total gets you to EUR 1.28trn by the end of September 2016. So some easing in the pace would still leave the ECB on course to complete its program.”
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