ECB corporate bond-buying program makes up almost 1 in 5 trades: Trax
Nearly 19 percent of all corporate bond activity in the past two days is down to the European Central Bank's corporate bond-buying program, according to insights from market data provider Trax.
The ECB formally kicked off its corporate bond buying program on June 8th, a move heralded by President Mario Draghi in March. As part of its plan, the ECB will buy euro-denominated investment grade bonds issued by companies in the euro area.
Data from Trax released Friday showed that in the whole of 2015, corporate bond buying accounted for 12 percent of all corporate bond activity processed by Trax. This number went up to 14 percent in just the first half of 2016, the firm reported. The company processes approximately 65 percent of all fixed income transactions in Europe through its post-trade services.
While the first list will be published on Monday, 18 July with details of all the holdings, some investors and traders told Reuters that the ECB has already added bonds of Italian insurer Generali, 10-year debt issued by Spain's Telefonica and five-year bonds from French utility Engie.
Analysts have pointed out that some of the companies that are most eligible for bonds since they are non-financial and have the highest investment grade include EDF energy, AbInBev, Telefonica, Volkswagen, T-Mobile and Enel. Sectors that are most likely to benefit from this program include utilities, consumer goods and telecoms, according to analysts.
The ECB has specified that the bonds must have a minimum remaining maturity of six months and a maximum remaining maturity of 30 years at the time of purchase. The program will be carried out by six central national central banks and will be available in both primary and secondary markets. These include the central banks of Belgium, Germany, Spain, France, Italy and Finland.