FRANKFURT (MNI) – The European Central Bank announced on Monday
that it settled E4.478 billion in bond buys in the week ending November
4, which was roughly half the E9.52 billion settled in the previous
week.
Last week’s bond buys followed another turbulent week in the
capital markets which saw Italian 10-year yields reached 7.5% amid
speculation Italy’s Prime Minister Silvio Berlusconi was preparing to
step down. News that the ECB was intervening appeared have a stabilizing
effect and may well have prevented a melt down in Italian bond spreads.
Italy’s tap auction of E3 billion worth of 5-year paper has weighed
on Italian spreads this morning with the curve out by an average of
15bps.
The new ECB purchases settled last week bring the cumulative total
still on the bank’s balance sheet to E187.0 billion. As usual, the
central bank said it will seek to sterilize the entire amount through a
quick tender to collect one-week term deposits.
The deposit tender, to be held Monday at 1030 GMT/0530 ET, will be
conducted as a variable-rate operation with a maximum bid rate of 1.25%,
the ECB said. The fixed-term deposits can be used as collateral in the
Eurosystem’s credit operations.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$$EC$,M$$FI$,M$X$$$,MGX$$$]
