RESEARCH ROUNDUP: ECB Corporate QE May Expand If Greece Worsens
2015-07-02 12:59:16.519 GMT
By Charles Daly
(Bloomberg) -- The pool of eligible corporate issuers for
ECB QE will likely encompass more utilities and other sectors,
especially if the Greece debt crisis takes a turn for the worse
after Sunday’s referendum, according to strategists and
economists.
* Earlier, Enel, Snam and Terna among borrowers whose debt may
now be purchased, according to the ECB’s website
* Affected issuers see bond spreads marked materially tighter
* Reflects fear that more needs to be done to support
region’sfragile economic recovery, writes Bloomberg’s Simon
Ballard
* RBS (Alberto Gallo)
* Could see wider range of corporate issuers being added
to list
* Other issuers ECB could buy in future incl. EDF, GDF
Suez, Tennet, Fortum
* Expansion shows ECB ready to act if necessary, on a
worsening of the Greek crisis
* More action possible with a “no vote” or escalation of
the Greek crisis; EUR IG corporate bond mkt is EU1.15t
in size
* More
* Barclays (Zoso Davies)
* Three of the names added (ENEL, SNAM and Terna) are
classified as utilities in Barclays Aggregate Indices
* Two factors common to all three names: they operate
infrastructure (utility) assets, and there’s part
ownership by the Italian govt
* Given lack of clarity over how names are added to the
ECB’s list, mkt will also price some probability of more
corporate issuers being added
* Repricing likely to be greatest for those issuers most
similar to the three incl. today: infrastructure/utility
names with govt involvement
* ABN AMRO (Hyung-Ja de Zeeuw)
* This opens the door for other national central banks to
add corporates to their eligible universe
* Shows ECB has taken more flexible stance toward the
adoption of new names, while sticking to its IG criteria
* Expansion amounts to 13 names with a total outstanding
amount of ~EU66b, of which EU51b matures between 2-30
yrs
* Names included are mostly from Italian (62%) , French
(17%) and Austrian (13%) origin
* If Bank were to add more utilities to its eligible
universe, could total little over EU100b
* ING (Jeroen Van Den Broek)
* Mario Draghi is overstepping the mark; these aren’t euro
agencies but rather cos. with some govt ownership
* QE should stay well away from euro corporate bond mkt
because it’s already very squeezed and illiquid; QE will
make that worse
* More
* JPMorgan (Greg Fuzesi)
* Highlights how ECB’s QE program has some internal
flexibility that’s still being exploited, both to
achieve intended purchase volume and its effectiveness
* Doubts the ECB will mind if today’s list expansion
creates impression it’s “willing and able to quickly
respond to any spillovers from Greece”
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Charles Daly in Stockholm at +46-8-610-0717 or
cdaly22@bloomberg.net
To contact the editors responsible for this story:
Jenny Paris at +44-20-3525-4044 or
jparis20@bloomberg.net
V. Ramakrishnan
2015-07-02 12:59:16.519 GMT
By Charles Daly
(Bloomberg) -- The pool of eligible corporate issuers for
ECB QE will likely encompass more utilities and other sectors,
especially if the Greece debt crisis takes a turn for the worse
after Sunday’s referendum, according to strategists and
economists.
* Earlier, Enel, Snam and Terna among borrowers whose debt may
now be purchased, according to the ECB’s website
* Affected issuers see bond spreads marked materially tighter
* Reflects fear that more needs to be done to support
region’sfragile economic recovery, writes Bloomberg’s Simon
Ballard
* RBS (Alberto Gallo)
* Could see wider range of corporate issuers being added
to list
* Other issuers ECB could buy in future incl. EDF, GDF
Suez, Tennet, Fortum
* Expansion shows ECB ready to act if necessary, on a
worsening of the Greek crisis
* More action possible with a “no vote” or escalation of
the Greek crisis; EUR IG corporate bond mkt is EU1.15t
in size
* More
* Barclays (Zoso Davies)
* Three of the names added (ENEL, SNAM and Terna) are
classified as utilities in Barclays Aggregate Indices
* Two factors common to all three names: they operate
infrastructure (utility) assets, and there’s part
ownership by the Italian govt
* Given lack of clarity over how names are added to the
ECB’s list, mkt will also price some probability of more
corporate issuers being added
* Repricing likely to be greatest for those issuers most
similar to the three incl. today: infrastructure/utility
names with govt involvement
* ABN AMRO (Hyung-Ja de Zeeuw)
* This opens the door for other national central banks to
add corporates to their eligible universe
* Shows ECB has taken more flexible stance toward the
adoption of new names, while sticking to its IG criteria
* Expansion amounts to 13 names with a total outstanding
amount of ~EU66b, of which EU51b matures between 2-30
yrs
* Names included are mostly from Italian (62%) , French
(17%) and Austrian (13%) origin
* If Bank were to add more utilities to its eligible
universe, could total little over EU100b
* ING (Jeroen Van Den Broek)
* Mario Draghi is overstepping the mark; these aren’t euro
agencies but rather cos. with some govt ownership
* QE should stay well away from euro corporate bond mkt
because it’s already very squeezed and illiquid; QE will
make that worse
* More
* JPMorgan (Greg Fuzesi)
* Highlights how ECB’s QE program has some internal
flexibility that’s still being exploited, both to
achieve intended purchase volume and its effectiveness
* Doubts the ECB will mind if today’s list expansion
creates impression it’s “willing and able to quickly
respond to any spillovers from Greece”
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Charles Daly in Stockholm at +46-8-610-0717 or
cdaly22@bloomberg.net
To contact the editors responsible for this story:
Jenny Paris at +44-20-3525-4044 or
jparis20@bloomberg.net
V. Ramakrishnan