ECB Shows Commitment to Covered Bonds

June 5, 2009

The announcement last month that the European Central Bank (ECB) is supporting the covered bond market with purchases worth E60 billion ($83.6 billion) has added further momentum to the covered bond market. It's still not clear which products will benefit from the purchases and by how much, but market participants said that the market has already begun to indirectly benefit from the more positive sentiment the forward-looking program has brought. 'The ECB stance has actually reopened the market by rebalancing clients' interests and providing a backstop bid for covered bond holders,' said Sebastien Gianfermi, head of SAS and covered bonds trading at BNP Paribas. 'This has brought back to the primary market several clients that were staying on the sideline and waiting for such a signal to reenter.'

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