CB reliance on ECB bodes ill for spreads, say investors

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CB reliance on ECB bodes ill for spreads, say investors

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(171215) -- FRANKFURT, Dec. 15, 2017 (Xinhua) -- European Central Bank (ECB) President Mario Draghi (L) and Vice President Vitor Constancio (R) attend a press conference at the ECB headquarters in Frankfurt, Germany, on Dec.14, 2017. The ECB Thursday decided to maintain the key interest rates for the euro area at present levels for an extended period of time, and well past the horizon of the net asset purchases. (Xinhua/Luo Huanhuan) (zjl) | Luo Huanhuan/Xinhua News Agency/PA Images

Covered bond investors believe spreads may widen, as sovereign bond yield rises shave off the relative value offered by the asset class and the European Central Bank prepares to end its purchase programmes. But the additional tier one (AT1) market is still thought to offer investors in bank debt unmatched opportunity.

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