Agency Amendments Negative For Dutch Govies

Published 04/22/2015, 08:00 AM
Updated 05/14/2017, 06:45 AM

Last week, ECB expanded its list of agencies for the PSPP by another 10 names, increasing the notional amount of eligible debt by some EUR83bn. The amendment has little impact on the overall structure, increasing the amount of buyable debt by EUR22bn and lowering the monthly purchases of government bonds by 2%, according to our estimates.

However, particularly in the Netherlands, the addition increases the amount of eligible debt significantly, reducing the pressure to source sufficient amounts of government bonds - we estimate that the amount of Dutch government bonds to be purchased will decline by 14% as a result. From that perspective, the amendments to the ECB's agency list are positive for the agencies that are now included, while it may weigh on the performance of Dutch government bonds, particularly in the 2-10y segment.

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