Yield spreads of bonds held by mutual funds decline in QE – ECB paper
Bond purchase programmes compress risk premia and boost demand, research finds
Mutual funds and other price-sensitive investors amplify, not dampen, the effect of corporate bond purchase programmes, new research from the European Central Bank shows.
In their working paper published on August 21, Fédéric Holm-Hadulla and Matteo Leombroni examine data from the ECB’s corporate sector purchase programme (CSPP) of 2016 and pandemic emergency purchase programme (PEPP) of 2020.
They show that, contrary to prior literature, price-sensitive investors such as mutual funds do not
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