But panellists at Wednesday’s first general session of the Global ABS 2015 Conference in Barcelona were generally sympathetic to the ECB’s pace of purchases — about 5%-7% of the eligible market, according to Gordon Kerr, structured finance researcher at DBRS.
Kerr's fellow panellists said the ECB was trying to avoid crowding out investors by not outbidding them for volume, and that, being a newcomer to the complex asset class, the bank should be forgiven for taking a cautious, if slow, approach.
“Everyone says they feel crowded out but the numbers tell a different story,” said Greg Branch, chief investment officer at Scio Capital.
It’s still far from clear that the ECB’s purchase programme will result in either a sustained increase in issuance and issuers, or a significant increase in lending to consumers and business, though spreads are indeed tighter than this time last year. Recent post-crisis debuts from Spain, Portugal and Ireland also have some observers saying that the ABSPP is beginning to work.
That brings up the question of how to truly revitalise the market. Sebastian Schuetz, head of section CEPH at Deutsche Bundesbank, suggested that the ECB act as a price maker in the market — as opposed to buying in line with what private investors demand — in situations where there is a spread differential between deals from periphery issuers and those of similar credit profile issuers from places like the Netherlands.
“If you have a well seasoned deal from Spain with a lot of credit enhancement and something from the Netherlands [for example], the spread difference is also due to illiquidity,” Schuetz said.
“I think that acting as a price maker in these areas would help to revitalise the market, especially in peripheral countries.”