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European Central Bank rulers agreed on Wednesday to allow banks to borrow from it to guarantee “high-risk bonds”, whether issued by governments or companies in the euro area, to meet the repercussions of the Corona virus pandemic on the global economy.
Advertise European Central Bank That its rulers agreed on Wednesday to allow banks to borrow from it to guarantee “high-risk bonds”, whether issued by governments or companies in the euro area, provided that the classification of these bonds did not fall to this box before the seventh of April.
A statement by the Central Bank said that the aim of this measure is to enhance the ability of banks to borrow “to continue to provide financial resources for the euro zone economy” while facing Catastrophic repercussions For the Covid-19 pandemic.
The statement added that any bond issued by a government agency or private company in the euro area and that “until the seventh of April this year meets the minimum requirements for credit quality” will be accepted as a guarantee even if the degree of classification after this date falls to the high-risk loan category .
This decision is considered “exceptional and reassuring,” according to Erik Dor, director of research at the Institute of Scientific Economics and Management, meaning for the markets in the first place Italian government bonds threatened to fall this week to the category of high-risk bonds or as it is called in the market language “speculative bonds”, note Only two degrees separate Italian bonds from this field.
On Friday, Standard & Poor’s is likely to downgrade Italy’s credit rating after previously putting it under negative watch.
Even though the agency is not expected to downgrade Italy’s credit rating to speculative bonds on Friday, this appears to be “almost inevitable,” according to an analytical note issued by Commerzbank in early April and seen by Agence France-Presse.
Commerzbank attributed the matter to the costly measures Italy had taken at the start of the Covid-19 pandemic crisis.
France 24 / AFP