Supply at risk as TLTRO to reduce incentives for SME ABS to ‘zero’

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Supply at risk as TLTRO to reduce incentives for SME ABS to ‘zero’

European Central Bank cuts interest rates to historic low
President of the European Central Bank (ECB) Mario Draghi speaks during a press conference in Frankfurt am Main, Germany, 05 June 2014. The European Central Bank cuts interest rates to an historic low of 0.15 per cent to spur economic growth and bank lending. Photo: ARNE DEDERT/dpa | Arne Dedert/DPA/Press Association Images

The way borrowing allowances are calculated under the European Central Bank’s latest flagship cheap funding programme may put ABS at a further disadvantage to covered bonds, according to analysts at Bank of America Merrill Lynch, who are concerned their recently lowered 2014 supply forecast for securitization in Europe should be cut again as a result.

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