The ECB decided yesterday to buy more Spanish securitized private debt or ABS, corporate bonds or mortgage-backed securities and loans of various types, something that had never done before bonuses.
Bloomberg spread the news at noon, adding that the entity chaired by Mario Draghi had given the order to buy French mortgage bonds maturing in the short term at Societe Generale and BNP Paribas and various Spanish institutions whose names were not disclosed at the close editing.
The ECB did not disclose details about how much money was spent in these purchases or how much of the debt from each country was bought. In fact, neither Draghi nor any other ECB official confirmed that such an operation had taken place.
“It is true that the purchase plan was prepared,” said Daniel Pingarrón, from IG Markets. However, neither the time nor the amount to be spend had been officially divulged. But today, ECB authorities have done both.
“For weeks, the news has always been a vague. Though it seems that buying ABS has definitively begun,” said Christian Torres, managing partner at Solventis.
Other experts, such as Jaume Puig, CEO of SpreadCo Management, preferred to reserve judgment until the time when Draghi announces the start of the program.
Bloomberg news claimed that two sources close to the case requested to remain anonymous. The agency also said that the ECB President plans to resettle in a similar balance to the one reached in mid-2012, after the first two bond repurchase programs. “At the time, it had reached 3 billion euros. Currently, the ECB’s balance sheet is at 2,038 billion. So the market interprets that the total amount should be around one billion euros. “
Draghi believes that such extraordinary measures, along with the structural reforms that are required of a good range of countries, starting with France and Italy, could overcome the risk of deflation that continues to menace the eurozone.
The truth is that this risk has increased pressure on the ECB, especially after the recent statements of the IMF, which increased to 40% the chance that the eurozone enters what it calls its third recession since 2008.
“As of yesterday, we must see the level of aggressiveness that the ECB will have in the purchase of bonds,” said Agustín Martín, head of European credit at BBVA.
Despite the fact that markets began the day with a positive trading session with a soaring Japanese Nikkei, the momentum could not continue and at the end of the day European indices retreated. Several news reports may have influenced the fall in trading, including the hypothetical recession predicted by the Bundesbank and rumors suggesting that that public banks will have trouble overcoming ‘stress tests’.