Economics

ECB Acts to Shield Weakest Euro Economies From Rating Cuts

Governing Council announced decision after call on Wednesday
Collateral eligible on April 7 stays valid even if cut to junk

EU Eyes $2.2 Trillion Plan; ECB Accepts Junk-Rated Bonds

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By Carolynn Look

April 22, 2020 at 6:50 PM UTC

Updated on

April 23, 2020 at 11:08 AM UTC

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The European Central Bank will accept some junk-rated debt as collateral for its loans to banks in a move that aims to shield the euro area’s most vulnerable economies as they face the risk of credit downgrades in the coronavirus pandemic.

The ECB will accept bonds as long as they had at least the lowest investment grade on April 7, it said after policy makers held a call on Wednesday evening. The decision to ignore future cuts comes two days before a possible reduction for Italy by S&P Global Ratings.