FRANKFURT (MNI) – The European Central Bank said Monday it resumed
its purchases of Eurozone government bonds last week, ending three weeks
on the sidelines.
The ECB said that E711 million SMP transactions were settled in the
week ending February 18. In the same time period, E40 million worth of
bonds matured, it said.
The action comes amid renewed tensions on peripheral markets,
especially Portugal. Portuguese 10-year spreads to Bunds have widened 3
bp today.
A spokesperson for Portuguese Prime Minister Jose Socrates told the
Financial Times on Friday that any suggestion that the government was
negotiating a bailout was “totally false.”
The last time the central bank conducted bond purchases was back in
late January, when its buys had slowed to E146 million.
With the ECB’s purchases, the total amount of bond buys to be
drained has risen to E77 billion. The ECB will drain that amount in a
quick tender to collect one-week term deposits.
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 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$$$,M$X$$$,M$$EC$]
