By Bill Thornhill
11 May 2021
The European Central Bank is struggling to maintain its exposure to peripheral European covered bonds this year, due to falling issuance, and has therefore increased its exposure to core European markets. This trend is set to continue, as supply will remain muted — even though banks are running out of eligible collateral to pledge for repo funding.
According to a biannual data report on the ECB's Covered Bond Purchase Programme (CBPP3) published this week, its holdings of Spanish covered bonds at the end of the first quarter 2021 were €5.3bn lower than at the end of September.Even so, the ECB remains 5% overweight Spanish Cédulas,