Three reasons why the ECB's bond buying will have a far-reaching impact

Should 'alleviate financial shocks'

Andrew Wilmont, manager of the Neuberger Berman European High Yield Bond fund, lists three reasons why the European Central Bank corporate bond buying programme will positively impact other areas of the market, and one reason why it may introduce more risk.

Faced with stubbornly low inflation the European Central Bank (ECB) has taken a leaf out of the Bank of Japan's playbook. As well as implementing a negative deposit rate, in March it announced its ongoing asset purchase programme (APP) would not only rise to €80bn per month, but also include "investment grade euro-denominated bonds issued by non-bank corporations". It made its first purchases of corporate bonds on 8 June and by the weekend it held just under €350m worth. The ECB will include bonds issued by companies headquartered outside the eurozone; it can buy in both the primary a...