Following-up on its decision of 7 May 2009 to purchase euro-denominated covered bonds issued in the euro area, the Governing Council of the European Central Bank (ECB) decided upon the technical modalities today. These modalities are as follows:
The purchases, for an amount of EUR 60 billion, will be distributed across the euro area and will be carried out by means of direct purchases.
The purchases will be conducted in both the primary and the secondary markets.
In order to be eligible for purchase under the programme, covered bonds must:
be eligible for use as collateral for Eurosystem credit operations;
comply with the criteria set out in Article 22(4) of the Directive on undertakings for collective investment in transferable securities (UCITS) or similar safeguards for non-UCITS-compliant covered bonds;
have, as a rule, an issue volume of about EUR 500 million or more and, in any case, not lower than EUR 100 million;
have, as a rule, been given a minimum rating of AA or equivalent by at least one of the major rating agencies (Fitch, Moody’s, S&P or DBRS) and, in any case, not lower than BBB-/Baa3; and
have underlying assets that include exposure to private and/or public entities.
The counterparties eligible to the purchase programme are those eligible for the Eurosystem’s credit operations, as well as euro area-based counterparties used by the Eurosystem for the investment of its euro denominated portfolios.
The purchases will start in July 2009 and are expected to be fully implemented by the end of June 2010 at the latest.
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