March 16, 2020 / 4:44 PM / 20 days ago

ECB ups support for private sector in torrid last week

The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, December 8, 2016. REUTERS/Ralph Orlowski/Files

FRANKFURT (Reuters) - The European Central Bank boosted purchases of private sector assets last week, data showed on Monday, increasing its support for banks and the broader economy as financial markets collapsed.

The ECB unveiled a new stimulus package on Thursday, including even more bond purchases this year, in a bid to stem the economic fallout from a coronavirus pandemic that is paralysing the euro zone’s economy.

But data showed it had probably started coming to the rescue even before then by buying 902 million euros ($1.00 billion) of asset-backed securities, the largest amount in any week since April 2018, when the monthly size of the programme was bigger.

These repackaged loans are likely to come under pressure as the euro zone economy effectively grinds to a halt due to government measures aimed at containing the virus, making it harder for borrowers to make repayments on time.

The ECB’s 948 million euro purchases of covered bonds were nearly twice their average since the programme started and corporate bonds also saw an increase, albeit smaller, from the previous week, at 1.877 billion euros.

“We do put some emphasis on the private sector bonds, because we believe that is where there is currently acute sensitivity,” ECB President Christine Lagarde told a news conference last week.

By contrast, sovereign debt purchases, which normally take the lion’s share of the ECB’s buying, came in at just 1.561 billion euros — less than half the amount bought in the previous week.

High-rated governments bonds such as Germany’s rallied last week as investors sought safety.

($1 = 0.8999 euros)

Reporting By Francesco Canepa; Editing by Catherine Evans

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