QE “World” Dragons, or finance the debts of non-European companies – Investing Today

At the meeting last Thursday, the ECB has developed the the corporate bonds , included among the assets purchased by the board in March, the same that has elevated the “quantitative easing “from 60 to 80 billion monthly. We know that corporate bonds may be purchased from Frankfurt, if they enjoy at least one rating “investment grade” by a rating agency. In the plan including bond purchases also issued by the insurance companies, and with a residual maturity between 6 months and 30 years, as well as companies with shares in one or more banks In theory, therefore, the ECB could buy a broadcaster bond which could use the proceeds to secure the accounts of a subsidiary bank, in turn possibly subject to European supervision. Also, it can buy up to 70% of each issue of securities. Finally, the company will be purchased emissions embedded in other companies with headquarters outside the eurozone.

Stimuli ECB, private bond yields declining

The first consequence of the strengthening of the ECB’s monetary stimulus has been the issuance of 300 million euro bond maturing in 2020 by Unilever, which took place yesterday with coupon 0% and 0.66% yield. It is a private issue treated at lower yields in the Eurozone. The Anglo-Dutch company has benefited, in fact, precisely the bullish trend of the euro-denominated bond prices after the announcement of the so-called “super-QE” a month and a half ago.

But what could happen would be madness. Allowing the ECB to buy bonds issued by companies belonging to entities with headquarters outside the eurozone would encourage them to use the so-called Special Purpose Vehicles (SPV) through which finance cost more and more content, except to invest in their countries the result of these emissions.

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