Cypriot bonds hold firm at €6.75 billion amid ECB moves

As of the end of November, data from the Cypriot Central Bank reveals that the Eurosystem maintained its holdings of Cypriot bonds valued at €6.75 billion.

This stability is attributed to the European Central Bank's ongoing efforts to deleverage its balance sheet as a strategy to curb inflation.

Breaking down the figures, the Public Sector Asset Purchase Programme (PSPP) portfolio retained Cypriot bonds worth €4.29 billion, with no maturities reported for this period.

Notably, the ECB concluded reinvestments from bond maturities in August 2023, aligning with its budget contraction objectives and contributing to liquidity adjustments in the market, all in support of the broader anti-inflation initiative.

Examining the overall landscape, the Eurosystem's bond purchase programs (APP) totaled €3.04 trillion by the end of November, reflecting a net decrease of €17.95 billion. Of this amount, €2.41 trillion was allocated to the PSPP.

Meanwhile, the Pandemic Emergency Purchase Programme (PEPP) saw an increase in the value of Cypriot bonds to €2.45 billion by November's close.

During the October-November period, recorded purchases amounted to €35 million. The PEPP portfolio's overall total as of December 1 stood at €1.66 trillion, with net purchases in November totaling €814 million.

It's important to note that net bond purchases under the PEPP were halted in March 2022. However, bonds maturing until the end of 2024 will be fully reinvested, with the ECB's Governing Council emphasizing a careful management approach to the future roll-off of the PEPP portfolio to avoid interference with the appropriate monetary policy stance.

[With information sourced from CNA]