The European Central Bank should refocus its asset-backed securities purchase program on the countries most in need of its help, according to Pacific Investment Management Co.

The ECB is too cautious in its acquisitions and should concentrate on buying bonds from nations with higher debt and deficits such as Spain and Portugal, Pimco money managers Felix Blomenkamp and Rachit Jain wrote in a note to investors. It has mainly bought notes secured by high-quality collateral, including prime mortgages and auto loans, from safer countries such as Germany, France and the Netherlands, they said.

Pimco is expanding on a similar call it made earlier this week for the ECB to concentrate on buying peripheral government bonds. The ECB is acquiring debt including asset-backed securities, which bundle individual loans into bonds that can transfer risk to investors from banks, to encourage lenders to offer more credit and stimulate Europe’s economy.

“The ECB’s low risk appetite in ABS has guided its purchases primarily to select sectors in core countries, which in our view never really needed help to begin with,” they said. "ABSPP should be refocused to more specific sectors, especially in peripheral economies, where loan margins remain high and credit availability is scarce.”

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