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The road to hell is paved with good intentions. In March, when Mario Draghi decided to expand the ECB’s asset purchases to include investment-grade corporate bonds his aim was to stimulate investment in Europe. Instead he has precipitated a frenzied chain reaction that could end up completely destabilizing this market.
“The ECB will bust the market like it did in covered bonds,” predicts one corporate financier gloomily. “The ECB is using your money to buy bonds from corporates that can already finance easily in order to drive spreads even tighter.
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