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IG/HY issuance in Euro Area: ECB’s the driver

European Central Bank is driving the corporate bond market in Euro Zone this year, through its actions. This year, ECB revealed that it will include corporate bonds in its portfolio of assets under its asset purchase program.

However, not all corporate bonds are included. It has to be investment grade and nonbank.

So far investment grade corporate bond issuance after initial weakness is in line with 2014/15 issuance and now stands more than €150 billion so far this year.

But thanks to early year market turmoil and ECB’s discretion in asset purchase High Yield bond issuances this year stand far below compared to last two years. In 2014 and 15, by this time of the year, bond issuance reached around €50 billion. This year it is just hovering around €10 billion.

Mario Draghi, President of ECB, speaking at monetary policy conference said, assets which are not included in the purchase program will also benefit from ECB policy, however signs are lacking as of now.

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