ECB's purchase of ABS pays off as prices rise

Brussels

EUROPEAN Central Bank (ECB) president Mario Draghi's plan to stimulate Europe's economy by buying asset-backed securities (ABS) is starting to show signs of working.

The ECB's purchase of four billion euros (S$6 billion) of notes since November is pushing prices to the highest levels in more than seven years in the region's 251 billion euro market. That is encouraging lenders from Mizuho Financial Group Inc to Caisse Centrale du Credit Immobilier de France SA to offload bonds that they have been holding onto since the financial crisis, according to people familiar with the matter.

The debt sales are the first indication that Mr Draghi's purchase programme is breathing life into the asset-backed securities market, which the ECB is targeting to encourage banks to lend more to European companies. While the plan has failed to ign…