📝ECB Already Supporting BTPs And Bonos Via PEPP: Nordea

Even if we do not see any immediate debt crisis, the pressure on Italian bonds is likely to increase in the coming months, forcing the ECB to activate the TPI.

However, it is worth noting that the ECB is already providing support via the reinvestments in the Pandemic Emergency Purchase Programme (PEPP), so spreads have widened despite this support. The central bank only releases a country breakdown of the PEPP purchases on a bi-monthly basis, so we only have data until the end of July. In June and July, the ECB allowed its holdings of e.g. German, French and Dutch bonds to decline, while it targeted the redemptions from these countries into markets like the Italian and Spanish ones. During this period, the net buying of Italian bonds amounted to around EUR 5bn per month, which is not huge but not insignificant either. Most likely, the ECB has continued such buying also after July. - Nordea