ECB buys twice as many bonds as top four countries sell

[FRANKFURT] The European Central Bank bought more than twice as many sovereign bonds from the euro zone's four largest states as they sold in the last two months, data showed on Tuesday, helping support an economy recovering from the impact of the coronavirus pandemic.

The ECB has been hoovering up unprecedented amounts of bonds for a year and a half in a bid to keep credit cheap for governments, companies and households hit by the outbreak and now facing rising inflation and supply chain disruptions.

The ECB bought 117.5 billion euros (S$184.5 billion) worth of public-sector bonds from Germany, France, Italy and Spain in August and September - some 2-1/2 times a net supply from the same countries that Citi analysts put at 47 billion euros.

The imbalance was most visible in Italy, where the ECB bought 24.6 billion euros worth of bonds against a supply that was negative by 21 billion euros, meaning coupon payments and redemptions were larger than new issuance.

The ECB purchase figures combine its Pandemic Emergency Purchase Programme, being scaled down and likely to end in March, and the smaller Public Sector Purchase Programme.

For the euro zone a whole, the ECB bought 136 billion euros of public-sector paper under PEPP in August and September, including bonds from supra-national agencies.

ECB President Christine Lagarde said last month the euro zone economy would regain its pre-pandemic size by the end of this year and PEPP purchases would be carried out at a slightly lower pace.

REUTERS