January 22, 2018 / 4:01 PM / 2 years ago

UPDATE 1-ECB swings into corporate bond-buying binge

 (Adds detail)
    FRANKFURT, Jan 22 (Reuters) - The European Central Bank
sharply raised its private sector bond purchases last week,
indicating it may skew the remaining months of its 2.55 trillion
euro ($3.12 trillion) quantitative easing scheme towards
corporate and covered bonds. 
    Half of the ECB's 7.65 billion euros of worth of net bond
purchases came from the private sector last week, three times
the long run average, Reuters calculations show.
    Such a number offers a clue to what the ECB means by keeping
 these buys "sizeable" this year.
    The ECB halved monthly bond purchases from the start of the
year but some policymakers argued that corporate buys should be
kept steady, increasing their proportion in the overall scheme,
because government debt is increasingly difficult to find and
cash to companies may stimulate growth more effectively.
    While the ECB has hinted at such a shift when it said that
private sector buys would remain sizeable, the January numbers
were the best hard evidence yet of its intent. 
    For January so far, private sector buys account for 35
percent of purchases, twice their rate since the programme
started nearly three years ago, ECB data showed. In December,
purchases of corporate bonds, asset backed securities and
covered bonds totalled just 8 percent of all debt buys.
    The ECB plans to buy 30 billion euros worth of bonds per
month until the end of September as it aims to keep borrowing
costs low to stimulate borrowing and spending all in the hope of
generating inflation.
    But the scheme is expected to end this year as growth
continues to pick up and unemployment falls, putting the euro
zone economy on its best run in a decade.
    For more detail on the ECB's asset purchases, please click:
($1 = 0.8163 euros)

 (Reporting by Balazs Koranyi  Editing by Jeremy Gaunt)
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