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Goldman “Conspiracy Theory” Validated As ECB Expands QE Program

July 2, 2015

Goldman “Conspiracy Theory” Validated As ECB Expands QE Program

The ECB has expanded the list of SSA securities eligible for purchase under PSPP. The updated list includes:

  • Tyoettoemyysvakuutusrahasto
  • OeBB-Infrastruktur
  • Asfinag
  • Infraestruturas de Portugal
  • Entidade Nacional para o Mercado de Combustiveis
  • Ferrovie dello Stato Italiane
  • Terna Spa – Rete Elettrica Nazionale
  • ENEL
  • SNAM
  • Administrador de Infraestructuras Ferroviarias – Alta
  • Velocidad
  • SNCF Reseau
  • Caisse Nationale des Autoroutes
  •  DARS

Since the program’s inception, we and others have said the central bank will likely need to add more names to the list of QE-eligible SSA bonds or move into corporate credit in order to ensure that NCBs can meet their purchase targets under the capital key (especially in core markets where scarcity is a problem) and in order to allay concerns about liquidity in the secondary market for some core EGBs.

That said, the decision to expand the list this week is obviously no coincidence and reflects the fact that the ECB is keen to ensure there are no lasting “spillover” effects from the meltdown in Greece on periphery yields which the central bank has worked so hard to keep unrealistically low.

The move also, as RBS noted this morning, shows the ECB is “ready to intervene closer to the real economy.” RBS also says the bank could move into IG corporate credit next, something we predicted months ago when we discussed the lower limit problem.

So that’s the surface-level analysis.

Beyond that, today’s announcement by the ECB seems to prove what we said in “Goldman’s Conspiracy Theory Stunner“; namely that Mario Draghi wants to push Greece over the edge in order to give himself an excuse to expand QE. Here’s how we explained the situation earlier this week:

 

…click on the above link to read the rest of the article…

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