Wall Street Journal
October 27, 2011
The European Central Bank will release details of its latest covered-bond buying program next week, although analysts have pointed out that the real solution to the huge financing needs of euro-zone banks lies in addressing the sovereign-debt crisis.
The ECB announced earlier this month that it would buy up to €40 billion ($56 billion) of covered bonds between November 2011 and October 2012. This is the ECB's second foray into the covered-bond market, after a successful round, in 2009 that boosted the market amid the credit crunch.
The new program comes as bond investors have grown increasingly worried about how the region's debt crisis could trickle down to banks holding large amounts of sovereign bonds. This worry has taken its toll on bank debt, even covered bonds, which are usually considered to be among the safest types of bonds that banks sell.
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