May 12, 2020 / 8:04 AM / 20 days ago

BlackRock 'reviewing' overweight on southern euro zone debt after German court ruling

(Reuters) - BlackRock said it was “reviewing” its overweight position on southern euro zone debt, citing the recent German court ruling which risked undermining the European Central Bank’s independence and limiting the size of its bond-buying stimulus.

“This (the ruling) comes as the ECB’s actions to cushion the pandemic’s fallout already looked meek compared with the U.S. Federal Reserve’s,” the world’s biggest asset manager said in a note.

It also “threatens to fuel fragmentation within the euro area in the long run,” BlackRock added.

On May 5, the German court gave the European Central Bank three months to justify its 2-trillion-euro bond purchase programme or have the Bundesbank pull out of the scheme.

The European Commission said on Sunday it could open a legal case against Germany over the ruling.

Reporting by Sujata Rao; editing by Thyagaraju Adinarayan

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