Tuesday, June 7, 2016

"The ECB’s momentous step into corporate asset purchases"

Oh good grief.
I decide the link immediately below, "Frontrunning the ECB: 'Investors in corporate bond ‘land grab’ ahead of ECB buying'" is postworthy and hit publish. My attention is then directed to the subject of the current post.

A comparison of the timestamps shows Izabella beat me by eight minutes even though she was handicapped by the need to actually write something rather than just cut-and-paste a major story.
As they say in the bond trading biz: "Ya snooze, ya lose".

From FT Alphaville:
The ECB will begin something truly unprecedented on Wednesday June 8. It will start buying corporate debt in a bid to push inflation to the hallowed 2 per cent mark and boost growth with it. What’s more, it will buy this debt both in the secondary market and the primary one.

Known as the corporate sector purchase programme (CSPP), market watchers say the move could push the cost of borrowing in euros to new lows. Some even argue the programme could become the central bank’s most market disruptive intervention yet.

Speculation also abounds whether the programme might encourage a mad rush of incorporations within the Eurozone as international companies seek to refinance their increasingly expensive dollar debt into bargain basement euro-denominated borrowings.

Though, if you’re worried about Europe becoming a safe harbour for corporate zombies as a result of this, the ECB reassures by way of its Q&A that the credit criteria it is using for purchases is top notch:...MUCH MORE