Wednesday, September 19, 2018

© Reuters. ECB headquarters building is seen in Frankfurt© Reuters. ECB headquarters building is seen in Frankfurt

FRANKFURT (Reuters) – France and Germany have taken the lion’s share of the European Central Bank’s purchases of company bonds, a part of its stimulus program that is likely to gain more prominence in the coming months, ECB data showed on Friday.

Companies in the euro zone’s two largest economies account for a combined 54 percent of the 114.7 billion euros ($134.04 billion) of corporate debt bought by the ECB since June 2016 in a bid to lower borrowing costs and stimulate economic activity, the data showed.

Corporate bonds are expected to take a larger share of the ECB’s purchases next year as its holdings of government debt are likely curbed to avoid hitting legal limits.

Friday’s data showed the ECB was by and large sticking to its plan of buying bonds in proportion to the outstanding debt of euro zone companies that are rated investment grade and are not banks.

France, whose companies account for 31 percent of all eligible bonds, was slightly under-represented at 29 percent of the ECB’s purchases and so was Italy. Spain and the Netherlands were fractionally above their quotas, the data showed.

Sectoral data showed utilities and infrastructure companies, the two largest sectors, were a touch below their quotas while telecoms and construction companies were a tad over-represented.

The ECB, which had published similar data in June, will now update the figures twice per year.

It is expected to announce on Oct 26 that it will reduce its monthly purchases, currently at 60 billion euros, from January in light of stronger inflation and economic growth in the euro zone.

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