ECB may extend its waiver

Frankfurt considers allowing acceptance of Greek bonds as collateral to go beyond June

ECB may extend its waiver

The European Central Bank is considering the extension beyond June 2022 of the exemption it granted to Greece in April 2020 in order for the country’s bonds to be accepted as collateral for Eurosystem financing, despite their having junk status.

Kathimerini understands that although no decision has been made on that front yet, it appears the good news will break soon, possibly after the ECB Governing Council meeting on March 10 and within next month. If this proposal that is on the ECB discussion table at the moment becomes a decision, it would constitute a vital catalyst for Greek bonds and for Greece’s credit rating upgrade.

Although Bank of Greece and ECB Council member Yannis Stournaras has told Kathimerini that the extension of the PEPP reinvestments program that Frankfurt decided in December effectively means the ECB will continue buying Greek bonds till end-2024 at least, the ECB has not yet made any statements over the extension of the waiver.

“It is self-evident that as long as Greek bonds are bought under any program, they are accepted as collateral,” the Greek central banker says.

Markets nevertheless require more clarity from Frankfurt, and sources note to Kathimerini that the extension of the waiver is much more important than any bond buying by the ECB: “It is crucial for anyone buying Greek bonds to know that at any given moment they can trade them and receive cash from the ECB at a cost that is similar to those of other countries,” a source explained.

After all, according to analysts, one reason behind the strong pressure Greek bonds have recently come under – besides the high national debt and the bonds’ junk status – is the fact that the waiver is about to expire without the ECB having addressed the issue formally in its last couple of Council meetings in December and January.

HSBC economist Fabio Balboni tells Kathimerni that some investors have concerns over the ECB tools for Greece’s support, and besides the waiver extension they want more clarity on the reinvestments program.

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