FT : ECB to buy government bonds below deposit limit; unchanged for corporate bo

ECB to buy government bonds below deposit limit; unchanged for corporate bonds


Following discussions over tweaking its quantitative easing programme, the European Central Bank confirmed that it would begin to buy government bonds with a yield below its -0.4 per cent deposit rate.

In details following its latest monthly decision to keep rates and QE unchanged, the ECB said it would not however drop the yield floor for its corporate or covered bonds purchases that make up its €80bn a month stimulus package.

Instead, policymakers said they would continue to give priority to government debt “above the deposit facility rate”,

“This means that the amount of purchases that have to be made at yields below the deposit rate will vary among jurisdictions” said an ECB statement.

The tweak was announced amid fears the ECB could be hit with a scarcity of eligible debt as a bumper bond rally drove German short-term yields to record negative lows. The yield floor was initially put in place last year, to match the -0.4 per cent deposit floor.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • RCII -15.6%, (Rent-A-Center sees Q4 EPS loss of ($0.30)-($0.20) vs $0.10 Capital IQ Consensus Estimate)
  • PLXS -2.3%, EGBN -1.4%, CP -1.2%, (also Canadian Pacific announces that Keith Creel will become President and CEO of the company effective January 31, 2017 following E. Hunter Harrison's decision to retire)
  • FUL -0.9%, SBNY -0.9%, SLM -0.8%
Other news:
  • AMDA -28.9% ( to offer and sell common stock and warrants in an underwritten public offering; size not disclosed)
  • ZYNE -13.8% (commences common stock offering)
  • VNOM -6.5% (Viper Energy Partners commences public offering of 7,000,000 common units representing limited partner interests; reports prelim Q4 operational results/acquisition update )
  • AAN -5% (RCII sympathy)
  • HTGC -3% (commences $150 mln offering of its Convertible Senior Notes due 2022)
  • HRTX -1.6% (commenced underwritten public offering of $150 million of shares of its common stock)
  • AA -1% (files for 36,311,767 share common stock offering by selling stockholders)
Analyst comments:
  • GNC -4.8% (downgraded to Sell from Neutral at Goldman)
  • SFM -3.5% (downgraded to Neutral from Buy at Goldman)
  • AKS -2.8% (downgraded to Sell from Neutral at Citigroup)
  • RCL -1.9% (downgraded to Sell from Neutral at Goldman)
  • KATE -1.6% (downgraded to Neutral from Buy at BofA/Merrill)
  • X -1.5% (downgraded to Neutral from Buy at Citigroup)
  • ASML -1.2% (downgraded to Neutral from Buy at Citigroup)