Following the latest meeting of its Governing Council, the European Central Bank (ECB) published details of the corporate sector purchase programme, or CSPP. In combination with other Eurosystem measures, the programme aims to provide accommodative monetary policy stimulus, helping the inflation rate in the euro area to return to a level below, but close to, 2 % in the medium term.

The Governing Council of the ECB had already decided to expand the existing purchase programme for public sector securities, covered bonds and asset-backed securities (ABSs) at its meeting on 10 March. The purchase programme is set to run until March 2017 at least. The Eurosystem had also announced that it would buy bonds issued by non-bank corporations in future. In total, the Eurosystem's monthly purchase volume will rise from €60 billion to €80 billion. The Governing Council of the ECB has since agreed on the technical details of the CSPP at its most recent meeting.

Bonds with a sufficient credit assessment

According to those details, six central banks acting on behalf of the Eurosystem will undertake the practical implementation of the programme, starting in June. Besides the Bundesbank, these are the central banks of Belgium, Spain, France, Italy and Finland. The ECB will coordinate the purchases.

These six central banks will purchase euro-denominated bonds issued by non-bank corporations established in the euro area. Bonds issued by credit institutions will be excluded from the programme. The eligible bonds must have a sufficient credit assessment, which is to say they must be investment grade. The central banks will make their purchases in both the primary market (for new issues) and secondary market. The bonds must have a minimum remaining maturity of six months and a maximum remaining maturity of 30 years from the date of purchase. On behalf of the Eurosystem, the central banks can buy up to 70 % of a single issue. However, this does not apply to bonds issued by public undertakings, for which there is a 33 % limit. Moreover, the Eurosystem may only purchase such bonds in the secondary market.

The Eurosystem will publish the CSPP volume on a weekly and monthly basis, and the primary and secondary market purchases on a monthly basis.