FRANKFURT, July 2 (Reuters) - Euro-zone central banks will implement the covered bond purchase programme gradually, depending on market needs, the European Central Bank said on Thursday.
The programme intends to contribute to a further decline in money market rates, ease funding conditions, improve liquidity and encourage banks to lend to their clients, the ECB said in a statement.
The ECB has earlier said it would buy 60 billion euros' ($85 billion) worth of euro-denominated covered bonds -- debt backed by a pool of assets such as mortgage loans that remain on the issuing bank's balance sheet -- directly from primary and secondary markets.
'The Eurosystem of central banks intend to implement the covered bond purchase programme gradually, taking into account market conditions and the Eurosystem's monetary policy needs,' the ECB said in a statement.
The programme, designed to help a market segment which the ECB says has suffered badly during the financial crisis, will begin on Monday, July 6.
Following are key details of the ECB's covered bond purchase programme:
* The covered bond issue shall, as a rule, have a minimum rating of AA or equivalent, awarded by at least one major rating agency
* Covered bonds purchased should be UCITS-compliant or have similar safeguards, determined at the sole discretion of the purchasing central bank.
* Eligible counterparties are those that participate in Eurosystem monetary policy operations or are used by a Eurosystem central banks for investment of its portfolios.
'Everything is prepared for this programme to go on,' ECB President Jean-Claude Trichet said earlier. 'I confirm that as regards durations, we will see exactly what is the maturity later. But we could go from 3 years to 10 years.'
He said the ECB would buy about 8 percent of the 60 billion euros in bonds, with the rest being purchased by the 16 euro-zone countries' central banks.
The covered bonds would be purchased from euro-zone banks, but could have a small part of assets backed by non-euro zone assets.
(Reporting by Krista Hughes and Sakari Suoninen; editing by David Stamp) ($1=.7087 Euro) Keywords: ECB RATES/BONDS (sakari.suoninen@reuters.com; +49 69 7565 1267; Reuters Messaging: sakari.suoninen.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The programme intends to contribute to a further decline in money market rates, ease funding conditions, improve liquidity and encourage banks to lend to their clients, the ECB said in a statement.
The ECB has earlier said it would buy 60 billion euros' ($85 billion) worth of euro-denominated covered bonds -- debt backed by a pool of assets such as mortgage loans that remain on the issuing bank's balance sheet -- directly from primary and secondary markets.
'The Eurosystem of central banks intend to implement the covered bond purchase programme gradually, taking into account market conditions and the Eurosystem's monetary policy needs,' the ECB said in a statement.
The programme, designed to help a market segment which the ECB says has suffered badly during the financial crisis, will begin on Monday, July 6.
Following are key details of the ECB's covered bond purchase programme:
* The covered bond issue shall, as a rule, have a minimum rating of AA or equivalent, awarded by at least one major rating agency
* Covered bonds purchased should be UCITS-compliant or have similar safeguards, determined at the sole discretion of the purchasing central bank.
* Eligible counterparties are those that participate in Eurosystem monetary policy operations or are used by a Eurosystem central banks for investment of its portfolios.
'Everything is prepared for this programme to go on,' ECB President Jean-Claude Trichet said earlier. 'I confirm that as regards durations, we will see exactly what is the maturity later. But we could go from 3 years to 10 years.'
He said the ECB would buy about 8 percent of the 60 billion euros in bonds, with the rest being purchased by the 16 euro-zone countries' central banks.
The covered bonds would be purchased from euro-zone banks, but could have a small part of assets backed by non-euro zone assets.
(Reporting by Krista Hughes and Sakari Suoninen; editing by David Stamp) ($1=.7087 Euro) Keywords: ECB RATES/BONDS (sakari.suoninen@reuters.com; +49 69 7565 1267; Reuters Messaging: sakari.suoninen.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.