FRANKFURT (MNI) – The European Central Bank announced on Monday
that no new bond purchases were settled through its Securities Market
Programme last week.
With no new bond buys settled in the week ended August 5, the
ECB said it will once again seek to drain E74.0 billion next week to
renew the sterilization of the bonds still on its balance sheet. It will
do so through a quick tender to collect one-week term deposits.
The draining operation, to be conducted on Tuesday at 9:30 GMT,
will be in the form of a variable-rate tender with a maximum bid rate of
1.5%, the central bank said. The liquidity will be held at the bank for
one week as a term deposit. The fixed-term deposits can be used as
collateral in the Eurosystem’s credit operations.
At his press conference last week, ECB President Jean-Claude
Trichet announced that the bond-buy program, after 19 weeks of
hibernation, would be re-activated.
Trades following the announcement showed that the ECB’s purchases
included debt from both Portugal and Ireland.
The latest purchases are also likely to include Spanish and Italian
paper after the ECB president called Sunday for budgetary rigor from
Eurozone governments — especially in Italy and Spain — and agreed in
exchange to continue buying up government bonds.
The central bank also said it intends to hold another
liquidity-absorbing operation next week.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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