Expand / Telefónica is the most securities denominated in euros has, with 25,500 million.
The European Central Bank (ECB) announced yesterday that it will buy euro-denominated bonds issued by non-financial enterprises in the euro area and with an investment grade rating. In total, according to Bloomberg calculations, a total 560,000 million in corporate bonds that meet these requirements totaling 900,000 million titles. In Spain, according to estimates from data EXPANDING Standard & amp; Poor’s and Bloomberg, the figure drops to 77,866 million. And there are a total of 14 Spanish companies with euro-denominated bond in that amount and with an investment grade rating (BBB- or higher).
Telefónica is the most securities denominated in euros has, amounting to 25,566 million, followed by Natural Gas, with 11,910 million and Iberdrola, with 10,496 million. All three have a BBB rating, two notches above junk or speculative grade.
ratings the private sector are bounded by the sovereign rating, which may cause the ECB thong less choice in those countries with the lowest notes. S & P maintains of Spain at BBB +, which causes there are many private issuers that do not reach that degree minimum investment required. Germany and other core countries have the highest AAA rating.
Effects The ECB and incorporates this new asset to its debt purchase program, known as QE. Until now, it was done with 60,000 million a month in sovereign bonds or public entities as well as regional and local councils or securitization bonds and bank debt. As of April 1, will acquire 20,000 million more per month, ie 80,000 million, as announced yesterday Mario Draghi, president of the institution. And from the end of the second quarter will begin the acquisition of corporate bonds as a complementary measure to try to prop up inflation and growth.
With these new purchases will cause further narrowing of spreads of private debt, which translates into a reduction in financing costs. However, the purchase of public debt had dragged down the guys who are paying companies to place their bonds. The titles of many Spanish companies at an average traded within five years, in fact, at around 0.5% in the secondary market. Now, it would not be ruled out that even investors came to pay any European company by buying its debt, as has happened with sovereign bonds and a German identity card this week.
Just announce Mario Draghi measurement, and corporate debt market reacted aggressively with price hikes. The Markit iTraxx Europe Index, which includes CDS (insurance against debt default) of European companies with investment grade, yielded 8 basis points to 84 basis points, the lowest since Jan. 7. In late February, this reference came to exceed 120 basis points.
Not only will lower financing costs for businesses, but could also provide incentives to enter the market to companies that have not ever done . In Spain, there is still a heavy reliance on bank credit, since only 20% of the funding comes from the capital markets.
What Spanish companies could benefit from buying bonds ECB
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