This Bond Giant Still Has $15 Billion to Play With
The ECB’s mammoth corporate debt-buying program is ending net new purchases. But it may have 1 billion euros a month to reinvest this year.
What has the ECB's 180 billion euro corporate debt program ever done for us?
Photographer: Martin Leissl/Bloomberg
This year heralds a brave new world for euro credit spreads. The continent’s biggest buyer of corporate debt is calling a halt after amassing a 180 billion euro ($206 billion) portfolio in just two and a half years. The European Central Bank’s Corporate Sector Purchasing Program (CSPP for short) is ending net new buys after gorging on investment grade euro corporate bonds. But the party isn’t completely over — just slowing down a lot.
The ECB has forged a different post-crisis path than other central banks, pushing QE stimulus more directly into the real economy by buying company debt. The Bank of England briefly followed, but stopped at just 10 billion pounds. The U.S. Federal Reserve chose another route, buying mortgage-backed bonds to breathe life back into its hardest-hit sector: real estate. Horses for courses.