ECB to begin corporate bond buying in June

Mario-Draghi-700x450.jpgThe European Central Bank will begin purchases of eurozone corporate bonds in June.

The central bank, which has released full details of scheme today, says it will buy non-financial companies’ bonds, with insurance company bonds being eligible, but bank bonds will be excluded.

Any bonds from a firm whose parent company is a bank will also be ruled out.

Speaking at a press conference after the ECB left interest rates unchanged today, ECB president Mario Draghi says bonds with maturities up to 30-years are eligible, with him saying the ECB can buy up to 70 per cent of the outstanding total of any eligible bond.

In March, the central bank increased its QE programme by €20bn to €80bn a month starting from April and included non-bank corporate bonds in the asset purchase programme, along with government bonds.

Since the March announcement, euro investment grade bond issuance had its strongest week on record at €30.6bn (£24bn) at the end of March.

The corporate bonds purchase, which will be denominated in euro, will be carried out by six national central banks, coordinated by the ECB.

The volume of corporate sector purchase programme holdings will be published on a weekly and monthly basis. A breakdown of primary and secondary market purchases will also be published every month, the ECB says.