FRANKFURT (MNI) – The European Central Bank said Monday that it had
resumed its purchases of Eurozone government debt in the secondary
market for the first time since late February.
The ECB said that E432 million in SMP transactions were settled in
the week ending March 25.
Over the same period, E1.054 billion worth of bonds matured, the
ECB added, thus reducing the amount of funds the bank would need to
drain to E76.5 billion. The ECB will drain that amount in a quick tender
to collect one-week term deposits.
The operation, to be conducted on Tuesday at 9:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
bank said. The liquidity will be held for one week at the bank as a term
deposit. The fixed-term deposits can be used as collateral in the
Eurosystem’s credit operations.
The central bank also said it intends to hold another
liquidity-absorbing operation next week.
Expectations had broadly pointed to the central bank returning to
the bond market after three weeks of remaining on the sidelines.
Last week, Portuguese Prime Minister Jose Socrates tendered his
resignation following the government’s failure to gain support for
further austerity measures. The move sent the country’s government bond
yields beyond levels considered sustainable and fueling expectations
that Portugal would eventually need to turn to the EU-IMF bailout
mechanism.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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