ECB keeps Italian debt purchase steady through govt crisis

FRANKFURT: The European Central Bank kept its purchases of Italian government bonds steady in the last two months, ECB data showed on Monday, even as the country went through a political crisis that briefly pushed up its borrowing costs.

Investors have been wondering whether the ECB was once again helping keep a yield on Italian bond yields since mid-January, when an unfolding government crisis only spurred a muted market reaction.

ECB data showed the central bank did not buy more Italian sovereign debt than foreseen by the country's quota in December and January. This is in stark contrast to massive ECB interventions last spring as Italy struggled with the first wave of the coronavirus pandemic.

The ECB bought 18.1 billion euros of Italian debt over the last two months under its pandemic-fighting programme plus an additional 3 billion euros under its regular stimulus scheme.

Taken together, this leaves Italy some 1.5 billion euros under its quota for the two months, according to Reuters calculations based on how much capital the Bank of Italy has paid into the ECB's coffers.

ECB President Christine Lagarde batted back suggestions the central bank was actively capping bond yields or spreads for certain governments when asked about the matter at her regular news conference on Jan. 21.

Italian government bonds even outperformed euro zone peers on Monday as talk of a possible premiership for former ECB president Mario Draghi cheered up investors.