Core, not periphery, may be hit by CBPP3 withdrawal

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By Bill Thornhill
31 Jan 2018

Covered bonds issued this week undermine the assumption that peripheral markets are likely to be more vulnerable to a spread widening when the European Central Bank cuts net purchases to zero under the covered bond purchase programme (CBPP3).

Deals issued this week by core European banks have relied more heavily on support from central banks than those from the periphery, where private demand has been bolstered by the positively evolving country credit story. 

This dynamic is at odds with the conventional view that peripheral covered bonds are ...

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