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Disintermediation and re-intermediation effects of the CSPP

Author(s): Óscar Arce, Ricardo Gimeno, Sergio Mayordomo

Date published: Feb 2019

SUERF Policy Note, Issue No 58
By Óscar Arce, Ricardo Gimeno and Sergio Mayordomo
Banco de España

JEL-codes: E52, E58, G2, G12.
Keywords: Corporate Sector Purchase Programme, Bond Issuances, Credit Reallocation.

The introduction of the Corporate Sector Purchase Programme by the ECB in March 2016 had a significant impact on the financing conditions and the external financing mix of the Spanish non-financial corporations, including not only the issuers of CSPP-eligible bonds, which are typically large companies, but also other smaller firms, which in general face tighter financial conditions. Regarding the former, during the month after the ECB’s announcement of the CSPP, the average yield of eligible bonds decreased significantly, also pushing up the flow of new corporate bond issuances. This expansionary effects of the programme also extended, although to a lesser extent, to others non-eligible bonds issued by non-financial corporations with credit ratings below investment grade. Interestingly, the ensuing contraction in banks’ loans given to firms issuing bonds had a positive side effect on the supply of new credit given to other companies that do not issue bonds, which are typically smaller and with limited access to fixed‒income markets. Thus, in this way, the ECB’s corporate QE unchained an indirect but powerful reallocation of credit in the banks’ loan books towards smaller firms.

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SUERF Policy Note, Issue 58SUERF Policy Note, Issue 58

Disintermediation and re-intermediation effects of the CSPPWeb version: Disintermediation and re-intermediation effects of the CSPP

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