ECB boosts Pepp but sov debt threats remain

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By Lewis McLellan
04 Jun 2020

The European Central Bank delivered a welcome — and bigger than expected — increase to both the size and scale of its Pandemic Emergency Purchase Programme (Pepp) on Thursday, causing eurozone periphery spreads to ratchet in while staving off concerns of debt sustainability for the moment. Lewis McLellan reports.

The governing council added €600bn to the Pepp and extended the programme’s minimum lifespan until June 2021. An expansion was widely expected, but the scale was larger than most forecasted, so the development caused a sharp rally in peripheral bonds, with Italy’s yield dropping 17bp and Greece’s 11bp.

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