The ECB has announced its decision to purchase €60bn in euro denominated covered bonds issued in the euro area. The covered bonds which the ECB will purchase directly in both the primary and secondary markets, must meet the following eligibility criteria:

  • they must be eligible for use of collateral for Eurosystem credit operations.
  • they must comply with the criteria laid out in Article 22 of the UCITs Directive and with similar safeguards for non-UCITs compliant covered bonds.
  • They must have been given a minimum rating of AA or equivalent by at least one of the major rating agencies (eg, Moodys,) and they must not have been given a rating lower than BBB -/BAA 3 by any rating agency.
  • They must have underlying assets from either public or private entities or both.