ECB to soak up almost entire EGB net supply in 2020

Euro area government bond issuance activity has progressed in line with the historical pattern in 2019. The remaining net funding needs for the rest of the year are very manageable. Due to marginally higher redemptions and net issuance, the gross issuance is expected to increase slightly in 2020.

Highlights:

  • Euro area government bond issuance activity has progressed in line with the historical pattern in 2019. The remaining net funding needs for the rest of the year are very manageable.
  • Due to marginally higher redemptions and net issuance, the gross issuance is expected to increase slightly in 2020.
  • Even without net purchases in 2019, the ECB still holds almost 25% of all outstanding euro area government bonds.
  • With the restart of its purchase programme this share will increase again close to 26% by 2020. The central bank will absorb almost the complete net issuance next year.
  • As the ECB holds already more than € 500bn of German debt, a possible scarcity of German Bunds is expected to come to the fore again over the course of 2020. However, given the limited size of the forthcoming QE programme, the self-imposed issue limit of 33% will be binding not earlier than the middle of 2021.

Read the full publication below.

ECB TO SOAK UP
ALMOST ENTIRE EGB
NET SUPPLY IN 2020

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