Up to now, the balance of the ECB’s corporate debt purchase programme is more positive than negative. Since it started on June 8, the number of corporate debt issues in the eurozone has shot up, allowing for a decline in yields (positive). On the other hand, the big companies are not having as much recourse to the banks for financing (negative, at least for the banking sector).
The aim of the Corporate Sector Purchase Programme (CSPP) was to achieve a more intense economic recovery, taking direct action on private sector financing. It’s too early to say if this goal is being accomplished, but the initial figures are encouraging.
According to the ECB, the CSPP had already invested 10.5 billion euros by July 15. In Spain’s case, non-financial companies registered a record volume of debt issues in the second quarter of the year: according to forecasts by AFI, the figure was close to 8.3 billion euros compared with 1.8 billion in the previous quarter.
Thanks to the programme, there has been a pick up in gross issuance activity, not only on the part of “eligible” debt issuers, but also from other non-eligible issuers, amongst whom it’s worth mentioning the US companies. Taking advantage of the drop in issuance costs in the eurozone, these firms are participating more and more in issues in euros in the European markets. And then there are also the smaller companies which are considering issues in alternative markets like The Alternative Fixed Income Market (MARF).
In Spain, the debt universe of investment grade Spanish companies is currently estimated at some 57 billion euros. The electricity sector is by far the one with the most eligible assets.º
According to experts, companies take advantage of the increase in debt issues for different purposes, but they highlight two in particular: i) restructuring the debt which they have on their balance sheet, extending maturities at a lower cost; and ii) fuelling investment.
Despite the banks’ reticence, the diversification in sources of financing is positive. And with this programme, Draghi has laid the foundations for establishing financial disintermediation in Spain and in the rest of the eurozone countries.