BBG: ECB prepares plan to extend Greek bond eligibility by 2024

The European Central Bank (ECB) is working on a plan to continue accepting Greek bonds as collateral for financing until the end of the Pandemic Bond Extraordinary Bond Purchase Program (PEPP), according to sources quoted by Bloomberg.

Such a decision requires the approval of the Governing Council of the ECB, which may even be taken in March, according to one of the agency sources who asked not to be named as the final decision has not yet been made.

The easing of guarantee measures taken by the ECB in the midst of the crisis, in which it made Greek bonds eligible for collateral, “will be reviewed in due course before its expiration in June 2022,” a central bank spokesman said. of the euro, according to Bloomberg.

Greek bonds fell into the “garbage” category in 2010, sparking a debt crisis on the continent that at times threatened to disintegrate the eurozone, leaving Greece still two notches below the investment grade, making its assets more vulnerable. market turmoil from those of other European countries.

Since the ECB marked the turn of its monetary policy earlier this month, the yield on 10-year Greek bonds has risen by more than 70 basis points.

To avoid bond market turmoil that could make monetary policy less effective at a time when the Greek economy is recovering from the shock of the coronavirus health crisis, the ECB said in December that it would continue to buy Greek debt through reinvestment of the PEPP emergency program by the end of 2024.

This suggests that Greek bonds “will also remain eligible as collateral for Eurosystem refinancing operations over the same period,” Bank of Greece Governor Giannis Stournaras said in an article published in the Kathimerini newspaper on Sunday.

The Greek government, for its part, stresses that Greece will regain its investment level in early 2023. To this end, Prime Minister Kyriakos Mitsotakis has pledged to meet the fiscal targets already set in the budget.