Cyprus bonds ac­count for only 4% of ECB’s pub­lic as­set hold­ings

Financial Mirror (Cyprus) - - CYPRUS -

DBRS in­sights into the Eu­ro­pean Cen­tral Bank’s as­set pur­chase pro­gramme re­ports that Cyprus govern­ment debt se­cu­ri­ties ac­count for only 4% of EUR 2.1 trln pub­lic sec­tor as­set hold­ings the ECB had.

The credit agency takes a look at the pub­lic sec­tor as­set hold­ings of the Eu­ro­pean in­sti­tu­tion on the oc­ca­sion of the as­set pur­chase pro­gramme com­ing to an end and rein­vest­ment op­er­a­tions re­sum­ing on Wed­nes­day.

DBRS “does not ex­pect the grad­ual ad­just­ment of PSPP hold­ings to have a ma­jor im­pact on the govern­ment debt mar­ket but does an­tic­i­pate that the ECB rein­vest­ment op­er­a­tions will con­tinue to play an im­por­tant role in the govern­ment debt mar­kets in the euro area, al­beit with a more limited im­pact.”

Given the rel­a­tively large amount of govern­ment debt se­cu­ri­ties that the ECB holds, it adds, “ma­tur­ing as­sets will pro­vide a sub­stan­tial amount of funds for rein­vest­ment to con­tinue sup­port­ing liq­uid­ity in the mar­kets.”

The ECB’s pub­lic sec­tor pur­chase pro­gramme hold­ings “reached just over EUR 2.1 trln at the end of 2018, equiv­a­lent to 27% of govern­ment out­stand­ing debt se­cu­ri­ties in the euro area.” The size of PSPP hold­ings varies across coun­tries, from around 4% of Cypriot govern­ment debt se­cu­ri­ties, as Cyprus only par­tic­i­pated in the pro­gramme for a few months, to 18% of Ital­ian se­cu­ri­ties, 22% of Por­tuguese se­cu­ri­ties, 25% of Span­ish se­cu­ri­ties, and 32% of Ger­man govern­ment out­stand­ing debt se­cu­ri­ties, be­low the is­suer limit of 33%, DBRS said.

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