Thursday, November 12, 2015

ECB considering buying debt of cities and municipalities as APP – Deutsche Bank

FXStreet (Delhi) – Jim Reid, Research Analyst at Deutsche Bank, notes that according to a Reuters article, the ECB is considering the possibility of buying debt of cities and municipalities as part of its asset purchasing programme, possibly as soon as March next year.

Key Quotes

“Reuters suggests that almost $500bn of bonds issued by cities and muni’s are in circulation currently, with the article suggesting that options are being studied. There was little mention of the possibility of buying corporate debt other than it being ‘much sought after and therefore difficult to buy’ according to the article.”

“In any case, it’s another clear dovish hint from the ECB that some sort of further stimulus is likely. While the expansion into cities and muni’s for Q3 wouldn’t materially raise the overall universe, it does potentially increase the time horizon for countries seeing a shortage of assets.”
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