–Back In The Market As Tensions Rise, After Three Weeks of No Purchases
FRANKFURT (MNI) – The European Central Bank returned to the
sovereign bond market last week, buying E711 million of sovereign
securities after having abstained completely in the previous three
weeks, the ECB announced Monday.
The purchases were no doubt in response to a deteriorating
situation in peripheral Eurozone bond markets, where spreads on Irish
debt — and on related credit default swaps — hit record highs. Yields
on Portuguese and Greek paper also widened significantly, and even Spain
started showing signs of getting dragged into the undertow.
The ECB said today it will reabsorb E64 billion Tuesday in a quick
tender to collect one-week term deposits.
That total represents the volume of bonds purchased through the
Securities Market Program — the formal name of the bank’s bond-buying
program — and settled as of last Friday, rounded to the nearest half
billion.
The operation, to be conducted on Tuesday at 10:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
bank said.
The liquidity will be held for one week at the bank as a term
deposit. The fixed-term deposits can be used as collateral in the
Eurosystem’s credit operations, the ECB said.
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 —
[TOPICS: MGX$$$,M$$FX$,M$X$$$,M$$EC$]
