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Dublin: 9 °C Wednesday 16 October, 2019
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ECB steers clear of bond-buying for first time since August

Last week marked the first time in six months that the European Central Bank didn’t intervene in the sovereign bond markets.

ECB president Mario Draghi: The ECB did not intervene in bond markets last week, the first time it's steered clear in six months.
ECB president Mario Draghi: The ECB did not intervene in bond markets last week, the first time it's steered clear in six months.
Image: Michael Probst/AP

THE EUROPEAN CENTRAL BANK opted against hoovering up the bonds of any of its member states last week – the first time it has not felt the need to intervene in markets in six months.

An ‘ad hoc’ communication issued by the bank yesterday said the bank had not bought any bonds between February 13 and 17, meaning its portfolio of foreign bonds remained valued at €219.5 billion.

The news marked the first time since August that the ECB has not considered it necessary to intervene in the markets, with the costs of borrowing for major eurozone members apparently staying within acceptable limits.

The ECB has previously been a major player on the second-hand bond markets in order to keep demand artificially high, hoping that its intervention could mean larger debt-laden economies like Italy and Spain would still be able to borrow on the open markets.

This morning the Spanish government would be asked to pay 5.1 per cent interest on 10-year loans – down from 6.7 per cent in late November – wile Italy would pay 5.43 per cent, down from a peak of 7.26 per cent just under three months ago.

The yield commanded by second-hand Irish bonds maturing in 2021 currently stood at 7.05 per cent this morning.

Read: “The time for burning bondholders is gone”: economists address promissory notes

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Gavan Reilly

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