The credit agency takes a look at the public sector asset holdings of the European institution on the occasion of the asset purchase programme coming to an end and reinvestment operations resuming today.
DBRS “does not expect the gradual adjustment of PSPP holdings to have a major impact on the government debt market but does anticipate that the ECB reinvestment operations will continue to play an important role in the government debt markets in the euro area, albeit with a more limited impact.”
Given the relatively large amount of government debt securities that the ECB holds, it adds, “maturing assets will provide a substantial amount of funds for reinvestment to continue supporting liquidity in the markets.”
According to the ratings agency the ECB’s public sector purchase programme holdings “reached just over €2.1 trillion at the end of 2018, equivalent to 27% of government outstanding debt securities in the Euro area.”
The size of PSPP holdings varies across countries, from around 4% of Cypriot government debt securities, as Cyprus only participated in the programme for a few months, to 18% of Italian securities, 22% of Portuguese securities, 25% of Spanish securities, and 32% of German government outstanding debt securities, below the issuer limit of 33%, the ratings agency says.