The European Central Bank (ECB) begins in March to buy public and private debt in the euro area amounting to 60,000 million euros monthly measure that wants to avoid deflation at a time which can no longer further lower interest rates.
Since the announcement of this program has fallen profitability and raised the price of government bonds.
The markets expect the ECB president Mario Draghi, offer more quantitative easing program at the press conference after the meeting that the governing council held Thursday in Nicosia.
The ECB will buy monthly from March 39,000 million euros sovereign bonds of the eurozone, according to estimates from Commerzbank analyst Michael Leister.
European monetary authority will buy sovereign debt in proportion to the share of each national central bank of the euro area in the ECB’s capital.
The share capital of the Bundesbank at the ECB is 25.7%, the Bank of France 20.3%, of the Banca d’Italia 17.6% , the Bank of Spain of 12.6% and Holland Nederlandsche Bank 5.7%.
Of the 39,000 million euros a quarter will be debt of Germany.
The other countries of the euro area provide the remaining capital of the ECB, which will coordinate purchases 18%.
Will the national central banks to carry out purchases and if they occur losses, assume 80% of the national central bank and the remaining 20% the ECB.
70% of the 7.55 trillion public debt market in the euro area is in the hands of domestic investors.
The banks are the largest holders, with 25% of the total, followed by insurers and pension funds with 22%, while foreign central banks also have slightly more than 20% managing its foreign exchange reserves, Leister added.
The market doubt that the ECB will find enough good quality sovereign debt to carry out its program of quantitative easing, which has already fired the Bond prices and profitability led even to negative ground.
“As we approach the time to buy bonds, the market has been more concerned that the program of quantitative easing ECB be hampered by insufficient supply of bonds, “notes the analyst of the Royal Bank of Scotland Richard Barwell.
Some analysts believe that there will be a relatively modest net issuance of government bonds this year.
“Most current investors reluctantly sold the ECB” says Leister.
The ECB wants to increase its balance by 1.1 billion euros, which will push down the euro, It shall promote exports and boost the economy of the region.
Germany placed this week for the first time in the debt market at five years at a negative interest rate.
Of the 13 auctions made by the German Treasury this year, nine have had negative returns.
The higher return than Germany has paid so far this year is 1.07%, on January 28 by the emission 30-year bond.
The search for investment alternatives given the low interest rates may lead in the coming months many investors to stocks that pay high dividends, according to expert Daniel Feingold Research Saurenz .
The index of Frankfurt, the DAX 30, has accumulated this week a gain of 3% and this month of nearly 7%, which makes you win so far this year by 16%.
The ECB is not as worried as the market on their ability to buy bonds and is convinced that banks in the euro area sell government bonds to their national central banks.
Banks that directly supervises the ECB have a direct net exposure of 1.7 billion euros to the rulers of the eurozone, according to figures from the agency Fitch risk measurement.
There is a clear consensus that too many banks in the euro area have exposure too large to their own countries, so that the supervisory pressure to sell their bonds can provide the Eurosystem find the bonds, according Barwell.
© EFE 2015
© ZGS 2015
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