June 21, 2017 / 8:10 AM / 7 months ago

ECB says 12 pct of corporate bonds were bought at negative yield

FRANKFURT, June 21 (Reuters) - Around 12 percent of corporate bonds held by the European Central Bank have been bought at negative yields and over half of all purchases involved French or German firms, the ECB said in a bulletin article on Wednesday.

The figures are among the most detailed on the scheme and come after several members of the European Parliament criticised the ECB for the lack of transparency on the roughly 100 billion euros worth of buys.

The ECB purchases the bonds as part of its 2.3 trillion asset buying programme, known as quantitative easing, aimed at curbing borrowing costs to induce growth and ultimately inflation.

The ECB said the structure of the buys, including the geographic or sector distribution, broadly reflect the eligible universe as the market is heavily skewed towards large firms in western and northern Europe.

The ECB also noted that bond issuance has increased since the scheme started, with the growth rate doubling to around 10 percent, even as bank lending is rising.

This would suggest that the scheme is indeed inducing the issuance of new debt, a welcome trend for the ECB, as it tries to induce more borrowing that could fund investments and thus growth.

The ECB has so far bought around 950 different corporate bonds from around 200 firms, with 30 percent coming from Germany and 25 percent from France. Spain and Italy each represent around a 10th of purchases.

Just over half of bonds were rated BBB, the lowest rated bonds the bank can buy and only 11 percent were AA rated, the ECB said.

Reporting by Balazs Koranyi; Editing by Alison Williams

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