In November 2014 covered bond prices fell sharply after the ECB started its purchases of the secured debt, as investors grew sick of expensive prices. More painful still was the so-called
Bundshock in mid-2015, when markets front-ran the ECB's purchases, only to see Bund yields jump 40 basis points in four days, inflicting severe losses. The more extreme monetary policy gets, the more wary investors are likely to be.
Context
The governing council of the European Central Bank will meet on April 21.
The ECB said on March 10 it would add corporate bonds to its monthly purchase programme, and would begin buying towards the end of the second quarter of 2016.
Citigroup analysts expect the ECB to buy 3-5 billion euros of corporate bonds a month. - Reuters