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One in five company bonds bought by ECB yielded less than zero 

August 3, 2016

Francesco Canepa, Reuters

One in five company bonds bought by the European Central Bank since June yielded less than zero, the ECB said on Wednesday, raising questions about whether the bank risks fuelling a market bubble and will need to slow the pace of its purchases.

The ECB has bought 13.2 billion euros ($14.8 billion) worth of corporate debt since it added credit to its shopping list in June, with the aim of lowering borrowing costs for companies to stimulate hiring and investment.

Yields on the bonds it bought ranged from a negative 0.3 percent to more than 3 percent, with just over 20 percent of the total yielding less than zero, the ECB said in its economic bulletin on Wednesday, publishing details of its purchases for the first time.

Negative-yielding debt bought by the ECB typically includes paper maturing over the next four years and issued by highly-rated or state-backed companies such as Swiss food group Nestle or French power supplier Engie. Read more

 
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