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PSPP To The Rescue

02 July 2015 by lberuti

This morning, the ECB expanded the list of agencies whose securities are eligible to be purchased under the Public Sector Purchase Programme (PSPP). The list created some buzz as it included three partially state-owned corporates, all of them Italian actually. In particular, the debt of ENEL ( Enel Spa ) will be included in the programme from now on. There is no definition of why they have chosen these specific bonds, but the bias for periphery names was obvious, and some saw this move as a policy signal from the ECB that it is prepared to take pre-emptive action to mitigate any negative effect from the events in Greece should the result of Sunday’s referendum be a resounding “NO”. That gave an early positive tone to the credit market which somewhat faded afterwards, but ENEL’s 5 year risk premium, which usually has an important beta to iTraxx Main which closed flat on the day, finished the session 16bps tighter at 82bps.