THE EUROPEAN CENTRAL BANK has confirmed that it bought €462 million of European bonds in the the last week of 2011 – bringing its total purchases for the year to just under €140 billion.
The bank has been hoovering up the bonds of second-hand bonds in a bid to keep the ‘yield’ – the interest rate on those bonds, which are a form of national I-O-Us – within a sustainable level.
The €462 million total for the last week of 2011 was a relatively modest total compared to other weeks; in the first two weeks of September the bank spent €27 billion hoovering up the bonds, mostly from Spain and Italy.
The purchases – were were restarted in late summer when investors began to shun Spain and Italy as investment opportunities – mean the ECB now holds a total of €211.5 billion in sovereign bonds from its member countries.
€38.7 billion of the ECB’s bond purchases have come since the beginning of November, when Mario Draghi took over from Jean-Claude Trichet as the president of the bank.
The cost of borrowing for the Italian government remains high, standing at just under 6.9 per cent for a 10-year bond on the first trading day of 2012.
The pressures on Spain have eased, with that country only expected to pay 5.105 per cent for similar loans.
Second-hand nine-year loans from the Irish government are currently trading at just under 8.5 per cent.
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