Saturday 16 December 2017

ECB increases support with €2bn purchase

Donal O'Donovan

THE European Central Bank (ECB) confirmed that it bought at least €2bn of eurozone government bonds on the open market last week; however, the final figure for the ECB's weekly bond purchase is expected to be much higher as it does not include bonds purchased between last Wednesday and Friday.

The latest figure for weekly bond purchases is the highest in the past 22 weeks, however incomplete data left analysts guessing about the true extent of last week's actions because of a delay in how the bank reports its purchases.

The move comes after ECB President Jean-Claude Trichet said it would step up purchases to tackle "acute" market tensions. The ECB said it had bought and settled €1.965bn of bonds last week, up from €1.3bn the previous week.

"The figures don't include the amount of debt purchased at the end of the week, allegedly the days when it bought most," Gary Jenkins of Evolution Securities said .

In a statement, the ECB admitted bonds "bought between Wednesday December 1 and Friday December 3 have not yet settled and hence are not reflected in the figure".

Mr Jenkins said the partial data means there is a danger that people will be unimpressed by the headline figure, after anticipating an even higher level of purchasing.

However, Padhraic Garvey, of ING Bank in the Netherlands, said even the initial figure was an important piece of data. "Two billion euro is still a big number and shows the ECB has re-accelerated the bond purchase programme." Mr Garvey said.

The cost of borrowing in Spain, Italy, Portugal and Ireland remained little changed yesterday. Traders said the ECB was back in the market buying Irish and Portuguese bonds yesterday. It's the third day in a row that buying was reported. The ECB does not comment on individual deals. Bringing down the cost of borrowing for eurozone member states is not part of the ECB's role.

It is charged with ensuring the smooth operation of markets and in the past four weeks the two issues have been effectively the same.

The latest figures bring the total amount of bonds bought to €69bn since the ECB purchasing scheme was launched in May. Sixty billion was bought in the first eight weeks of the programme.

Irish Independent

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