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The
ECB has bought 13.2 billion euros ($14.8 billion) worth of
corporate debt since it added credit to its shopping list in
June, with the aim of lowering borrowing costs for companies to
stimulate hiring and investment.
Yields on the bonds it bought ranged from a negative 0.3 percent
to more than 3 percent, with just over 20 percent of the total
yielding less than zero, the ECB said in its economic bulletin
on Wednesday, publishing details of its purchases for the first
time.
Negative-yielding debt bought by the ECB typically includes
paper maturing over the next four years and issued by
highly-rated or state-backed companies such as Swiss food group
Nestle <NESN.S> or French power supplier Engie <ENGIE.PA>.
The drop in yields since the program was announced in March
indicated that the ECB had succeeded in lowering interest rates,
at least for the large firms that finance themselves on the
market.
But it also raised concerns that heavy buying by the central
bank was pushing down yields too far, where they may soon no
longer reflect the risk of a default by the issuer, weakening
market discipline on borrowers and eventually contributing to a
bubble.
Around a dozen bonds bought by the ECB, including some paper
issued by state-owned German rail operator Deutsche Bahn,
already yield less than the so-called risk-free rate, a market
benchmark used to gauge the reward investors earn for taking on
credit risk, according to UniCredit estimates.
"My expectations is the ECB will slow down its purchases
because, if it maintained its current volume, then it would need
to buy spreads down into negative territory for many companies
for which a negative spread would make no sense," said Philip
Gisdakis, an analyst at UniCredit.
The ratings of the bonds bought in the credit program ranged
from AA to BBB- and their distribution reflected that of the
universe of eligible debt, the ECB said in the bulletin.
Producers of consumer goods such as Unilever <ULVR.L> <UNc.AS>
accounted for 28 percent of the bonds bought by the ECB, making
it the most represented sector in the scheme, followed by
utilities, it added.
The majority of purchases were worth less than 10 million euros
each, with trades completed directly with issuers typically
larger than those carried out on the market.
(Editing by Kevin Liffey)
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