Credit: Central banks head off piste

In recent months several European central banks have started to diversify their portfolios, having traditionally bought only government debt. According to one senior banker, those in charge of the portfolios at the Swiss National Bank, for example, are starting to “go off piste”, while others are “certainly considering” moving down the credit curve.

Although central banks have long bought triple-A-rated debt from European and US agencies and supranationals, the recent movement down the credit curve to single-A ratings, with their associated risks, is a significant break from the past.