ECB may also purchase loans insurers – Financieele Dagblad

also blame US companies like Amazon, General Electric, Starbucks and Apple can be purchased under the buy-back program of the European Central Bank. According to a explanation that placed the ECB Thursday on its website.

The ECB announced on March 10 that there are also corporate bonds will be bought at the end of the second quarter. This allows the central bank will reduce interest rates and thus trigger more investments. which should ultimately lead to one higher inflation (which now stands at 0%). The announcement went analysts and ECB watchers assume that only debt of companies eligible eurozone.

“But American loans can also qualify,” bond strategist Hyung-ja concludes de Zeeuw ABN Amro. The issuing party must meet certain security requirements. “There are criteria and there may also US companies to comply. That is difficult to explain to European citizens. Thus, US companies may be able to borrow cheaply from the ECB’s policy.

These companies must be an independent legal entity in the eurozone and have been in possession of the highest credit rating (investment grade). The debt must be issued in euros. According to ECB-watcher Elwin de Groot does that have to do with the fact that they bond pond which is fished from June to want to keep as much as possible. “You see the maturity that can be purchased, from six months to thirty years. Otherwise there might be available at little paper says De Groot who also noticed it reasonably Draghi gave short answers.

The ECB president did not amount stick on the buy-back program for corporate bonds. De Zeeuw ABN AMRO starts from € 5 to € 7 billion per month, which is less than 10% of the € 80 billion purchased in total bonds to stimulate growth and inflation.

The ECB has six central banks (Belgium, Germany, Spain, France, Italy and France) designated to buy the loans. Except on the secondary market may also strike directly at issue bonds.

With the purchase of bonds does not happen. And where in the purchase of government bonds the capital key is used to determine how much paper is purchased from any country that is in the business loans not. An index is created from all bonds that are eligible and which are then given a weighting determined by the amount outstanding. Central banks use those weights to determine how much they buy from any company loan.

Bank loans are excluded but insurers bonds are also eligible. As well as financial subsidiaries of automobile companies such as BMW Finance. After the announcement increased the bond prices of some European insurers and on the Damrak the Aegon shares went up. Possibly because investors expect borrowing costs go down. Insurers have so far mainly affected by the low interest rates. As pension funds they are struggling with low yields to meet their future obligations.

The risk of default is shared by all central banks in the eurozone. For example, the Dutch Central Bank may make pay as a company in Italy for example, can not meet its payment obligations. That differs from the buy-back program of government bonds. It is subject to the national central banks to suffer the pain and that can not be passed on to the entire euro zone.