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ECB bought €2.7bn of bonds last week alone

So much for winding down the controversial bond-buying scheme… Frankfurt may have been the only buyer last week.

People check a monitor reporting financial data outside a bank in Milan.
People check a monitor reporting financial data outside a bank in Milan.
Image: Giuseppe Aresu/AP

THE EUROPEAN CENTRAL BANK has announced it spent €2.7bn buying the bonds of weak Eurozone countries last week – the highest spending on its buy-back scheme in six months.

Zerohedge reports that new ECB data shows purchasing of €2.7bn for Monday 6 to Friday 10 December – its biggest spending in several months – is the largest wad of cash it has thrown at the debts of weak European nations since the first two weeks of its Securities Market Programme (SMP).

The vast majority of that buying went on Portuguese and Irish bonds, the site believes, with further smaller spending on Spanish and Belgian government debt.

Zerohedge also quotes trader sources who suggest that such is the weak demand for the debts of Eurozone countries that the European Central Bank itself, through its own proxy purchasers, is the only buyer on the market seeking to buy Ireland’s government debt.

The price of Irish government borrowing on the open markets has come down significantly since the announcement of the bailout deal and the introduction of the National Recovery Plan, though the price as begun to drift again today, standing just short of 8.1% as of 3;45pm.

Portugal’s borrowing has also become moderately more expensive, rising to above 6.3% for its ten-year bonds, while Spanish bonds stand at 5.45%, only moderately off their all-time peak of November 30.

The continued rise of European borrowing costs – not helped by France and Germany’s adamant refusal to entertain the prospect of common ‘E-bonds’ – means the ECB may have to continue its massive purchases into the coming week.

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Gavan Reilly

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