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15 Apr 2015
"ECB's QE risks running out of eligible government bonds" – Moody’s
FXStreet (Mumbai) - Moody's Investors Service released a research report titled "ECB's QE risks running out of eligible government bonds" on Tuesday which noted that the European Central Bank (ECB) might be forced to alter some of its own rules governing the QE or risk running out of eligible bonds it is buying from the governments in the Euro area.
Marie Diron, senior vice president and author of the report, notes, "Even if the pace of decline in bond yields slows in the remainder of the year, the ECB could run out of eligible bonds from some governments by the turn of the year,"
"Assuming that bond yields continue to fall half as fast as seen in recent months, Moody's calculates that the ECB would run out of eligible bonds from the governments of Austria, Finland, France, Ireland, the Netherlands and Portugal. Only Spanish and Italian government bonds would be available through to the end of the program,"
"If yields keep falling, the ECB may have to amend the criteria which dictate which bonds it buys in order to reach the target size of the program."
Marie Diron, senior vice president and author of the report, notes, "Even if the pace of decline in bond yields slows in the remainder of the year, the ECB could run out of eligible bonds from some governments by the turn of the year,"
"Assuming that bond yields continue to fall half as fast as seen in recent months, Moody's calculates that the ECB would run out of eligible bonds from the governments of Austria, Finland, France, Ireland, the Netherlands and Portugal. Only Spanish and Italian government bonds would be available through to the end of the program,"
"If yields keep falling, the ECB may have to amend the criteria which dictate which bonds it buys in order to reach the target size of the program."