FRANKFURT (Reuters) - The European Central Bank will continue to review the eligibility status of the bonds it buys, its president said, amid speculation it might add non-investment grade debt to its asset purchase programmes
“We have defined our parameters for our purchases,” Christine Lagarde said, when asked at the ECB’s post-policy meeting news conference if it now planned to include junk-rated bonds.
“We will continue to observe the situation and take appropriate and proportionate action,” she added. “Aside from that, the (bank’s) governing council has not discussed this matter.”
Euro zone companies are being hit by a wave of credit downgrades as the bloc’s economy suffers its worst recession since World War Two and entire sectors such as commercial airlines see their business all but collapse.
The ECB already accepts the bonds of companies that have lost their investment-grade credit ratings since April 7 as collateral in its lending operations.
But unlike the U.S. Federal Reserve, it does not include bonds that have recently lost their investment grade ratings in its purchase programmes.
(This story has been refiled to add dropped words ‘news conference’ in second paragraph)
Reporting by Francesco Canepa and Balazs Koranyi; writing by John Stonestreet; editing by Marc Jones