jeudi 5 février 2015
EMU Periphery Watch: QE Caps To Leave Some States At the Limit
Posted on 12:06 by nice news
European Central Bank bond purchases under its quantitative easing programme could push several peripheral Eurozone countries to the limit of what the central bank says it stands ready to buy from any one debt issuer.
That's because the ECB already owns billions in debt issued by Ireland, Portugal, Greece, Spain and Italy in its Securities Market Programme, which was discontinued in 2012. Greece's SMP debt, for example, already puts it at the 33% cap that the ECB says it will buy from a single issuer.
The ECB plans to calculate the 33% cap based on the amount of bonds a country has in the 2-year to 30-year maturity range, not its total debt, several official sources said.
Based on that, both Ireland and Portugal could both be above the 33% cap by the time the QE programme is scheduled to end in September 2016.
In Ireland, for example, ECB purchases are set to total E13.8 billion based on its position in the capital key. With SMP debt estimated at around E7.4 billion and another E24.5 billion in government bonds held by Ireland's central bank because of 2013 promissory note swap, Eurosystem holdings of Irish debt by September 2016 could equal 37% of the roughly E124 billion in Irish bonds currently outstanding.
Portugal is in a similar position. With estimated SMP debt of E15.3 billion and projected QE purchases of E20.7 billion, Portugal debt owned by the Eurosystem could exceed 37% of eligible debt by September 2016
To be sure, the SMP debt totals will decline as bonds mature, but the ECB could find that extending the QE programme, as Executive Board member Benoit Coeure has suggested, may be difficult as Eurozone countries on the periphery and elsewhere run out of bond buying headroom.
"If you extend or accelerate the programme, at some point you either run into that constraint, or the possibility of hitting that constraint becomes plausible," said Richard Barwell, senior European economist at
That's because the ECB already owns billions in debt issued by Ireland, Portugal, Greece, Spain and Italy in its Securities Market Programme, which was discontinued in 2012. Greece's SMP debt, for example, already puts it at the 33% cap that the ECB says it will buy from a single issuer.
The ECB plans to calculate the 33% cap based on the amount of bonds a country has in the 2-year to 30-year maturity range, not its total debt, several official sources said.
Based on that, both Ireland and Portugal could both be above the 33% cap by the time the QE programme is scheduled to end in September 2016.
In Ireland, for example, ECB purchases are set to total E13.8 billion based on its position in the capital key. With SMP debt estimated at around E7.4 billion and another E24.5 billion in government bonds held by Ireland's central bank because of 2013 promissory note swap, Eurosystem holdings of Irish debt by September 2016 could equal 37% of the roughly E124 billion in Irish bonds currently outstanding.
Portugal is in a similar position. With estimated SMP debt of E15.3 billion and projected QE purchases of E20.7 billion, Portugal debt owned by the Eurosystem could exceed 37% of eligible debt by September 2016
To be sure, the SMP debt totals will decline as bonds mature, but the ECB could find that extending the QE programme, as Executive Board member Benoit Coeure has suggested, may be difficult as Eurozone countries on the periphery and elsewhere run out of bond buying headroom.
"If you extend or accelerate the programme, at some point you either run into that constraint, or the possibility of hitting that constraint becomes plausible," said Richard Barwell, senior European economist at
EMU Periphery Watch: QE Caps To Leave Some States At the Limit
Inscription à :
Publier les commentaires (Atom)
0 commentaires:
Enregistrer un commentaire