Cypriot bonds purchases by the ECB under PSPP and PEPP reach €7 billion by November

Cypriot government bonds purchased by the European Central Bank under the Public Sector Purchases Programme (PSPP) and the Pandemic Emergency Purchases Programme (PEPP) have reached €7 billion, according to data published by the ECB.

According to data analysed by CNA, the Cypriot bonds acquired by the ECB under the PSPP amounted to €4,483 million by the end of November, with net purchases in the same month amounting to €31 million. The Weighted Average Maturity (WAM) of these bonds amounted to 8.9 years.

The ECB has terminated net purchases under the PSPP in June 2022 but it continues to invest principal amounts from maturing bonds until February 2023.

Furthermore, Cypriot bonds at the ECB’s balance sheet purchased under the PEPP amounted to €2,487 million by end-November with net purchases of €4 million carried out in the period of October – November. The WAM of these bonds amounts to 8.3 years.

Net purchases under the PEPP have been terminated in March 2022, with ECB reinvesting the principal amounts from maturing bonds until the end of 2024.

In its last monetary policy meeting on December 15, the ECB governing council announced that it will start shrinking its balance in the context of “quantitative tightening” along with the normalisation of its monetary policy in a bid to fight soaring inflation.

The ECB said that the Asset Purchase Programme (APP) portfolio “will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities” beyond February 2023.

“The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time,” the ECB said.

The ECB also reiterated its position over PEPP namely to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024.