Frequently asked questions on corporate sector purchase programme

Updated on 8 January 2025

The Eurosystem no longer conducts purchases of corporate sector securities under the asset purchase programme (APP) or the pandemic emergency purchase programme (PEPP). This follows the Governing Council’s decision on 15 June 2023 to discontinue reinvestments under the APP from July 2023 and the Governing Council’s decision on 12 December 2024 to fully discontinue reinvestments under the PEPP at the end of 2024.

Eligibility criteria

Q1.1 What were the minimum and maximum maturities of corporate sector debt instruments eligible for purchase?

In order to qualify for purchase under the corporate sector purchase programme (CSPP), debt instruments had to have either (i) an initial maturity of 365/366 days or less and a minimum remaining maturity of 28 days at the time they were bought, or (ii) an initial maturity of 366/367 days or more, a minimum remaining maturity of six months and a maximum remaining maturity of less than 31 years (i.e. purchases of securities with a remaining maturity of up to 30 years and 364 days were possible) at the time they were bought. The upper limit was in line with that applied to the public sector purchase programme (PSPP). The lower limit ensured that assets issued by small and medium-sized corporations were also part of the universe of eligible debt instruments.

Q1.2 What was the minimum issuance volume of corporate sector debt instruments eligible for purchase?

There was no minimum issuance volume for corporate bonds eligible for purchase under the CSPP. This ensured that corporate bonds with small issuance volumes (often ones issued by small firms) could also be purchased. To be eligible for purchase, a commercial paper security had to have a minimum outstanding issuance amount of €10 million.

Q1.3 Could the Eurosystem buy debt instruments with negative yields? Was there any minimum yield for the purchases?

Purchases of eligible debt instruments with a negative yield to maturity were permissible. Purchases below the deposit facility rate were also permissible in the APP to the extent necessary. The Governing Council decided in January 2017 that purchases of assets with yields below the deposit facility rate could take place under the PSPP to the extent necessary. On 12 September 2019 the Governing Council decided to extend this possibility to the private sector parts of the APP, specifically the third covered bond purchase programme (CBPP3), the asset-backed securities purchase programme (ABSPP) and the CSPP.

Q1.4 How did you treat a debt instrument if it had two or more ratings? Which rating applied?

In accordance with the practice followed under its collateral framework, the Eurosystem considered only credit assessments provided for the issue, issuer or guarantor by credit rating agencies (i.e. external credit assessment institutions (ECAIs)) which are accepted under the Eurosystem credit assessment framework (ECAF).

The use of these ratings is outlined in Articles 83 and 84 of Guideline ECB/2014/60. Article 84 specifies that an issue rating has priority over issuer or guarantor ratings. In general, the first-best rating must have a minimum credit assessment of credit quality step 3 (currently equivalent to an ECAI rating of BBB-/Baa3/BBBL). The equivalent short-term ratings are A-2/P-2/F3/R2-L under the ECAF. Guarantor ratings are considered only in cases where the guarantee complies with the requirements set out in Part Four of Guideline ECB/2014/60.

Q1.5 Will the Eurosystem sell its holdings of debt instruments if they lose eligibility?

The Eurosystem may choose to, but is not required to, sell its holdings in the event of a loss of eligibility, e.g. a downgrade below the credit quality rating requirement.

Q1.6 The press release on the CSPP refers to “bonds issued by non-bank corporations”. What exactly does this mean? Were debt instruments issued by insurers eligible for purchase?

To have been eligible for purchase, the issuer of a corporate sector debt instrument should not have been a credit institution or have had any parent undertaking (as defined in Article 4(15) of the Capital Requirements Regulation) which was a credit institution (as defined in Article 2(14) of Guideline ECB/2014/60). Insurers that fulfilled these criteria were eligible issuers.

Q1.7 The press release on the CSPP refers to “bonds issued by non-bank corporations established in the euro area”. Which criteria did the ECB use to decide whether an issuer was established in the euro area? Could debt instruments issued by non-euro area companies that had issued debt in the euro area also be purchased?

Debt instruments issued by issuers incorporated in the euro area were eligible for purchase.

In practical terms, this means that issuers had to be euro area residents. The location of incorporation of the issuer’s ultimate parent was not taken into consideration in this eligibility criterion. Thus, corporate debt instruments issued by corporations incorporated in the euro area but whose ultimate parent is not established in the euro area were eligible for purchase, provided that they fulfilled all other eligibility criteria.

Q1.8 In what way, were debt instruments issued by car manufacturing companies eligible for purchase, given that many of those companies have “internal banks”?

Provided no parent of the issuer of the debt instrument was a bank, the issuer fulfilled the non-bank criterion. If the issuer had a subsidiary that was a bank, the issuer was not excluded under this criterion. Consequently, the Eurosystem could buy such an issuer’s debt instruments if all other eligibility criteria were met.

Q1.9 In order to be eligible for purchase under the CSPP, what was the required legal form for otherwise eligible international debt securities?

Admissible forms of international debt securities are specified in Article 66 of Guideline ECB/2014/60 and depend on whether the securities are issued in global bearer or global registered form. International debt securities issued in global registered form after 30 September 2010 must be issued under the new safekeeping structure for international debt instruments. International debt securities issued in global bearer form after 31 December 2006 must be issued in the form of new global notes and are to be deposited with a common safe keeper which is an ICSD or a CSD that operates an eligible SSS. International debt instruments in individual note form issued after 30 September 2010 were not eligible.

Q1.10 At the start of the CSPP, did certain PSPP-eligible agency issuers become eligible for the CSPP instead?

Yes. Following the Eurosystem’s systematic review of all public undertakings which complied with the PSPP and CSPP eligibility criteria, it allocated public undertakings to one or the other of the two programmes. On the basis of this review, several agency issuers previously eligible for the PSPP instead became eligible for CSPP purchases. These issuers were: ENEL S.p.A., SNAM S.p.A., Terna S.p.A. – Rete Elettrica Nazionale, Ferrovie dello Stato Italiane S.p.A. and ENMC – Entidade Nacional para o Mercado de Combustíveis E.P.E.

Q1.11 What exactly did you define as a “public undertaking”?

The term “public undertaking” is understood in the sense of Article 8 of Council Regulation (EC) No 3603/93 of 13 December 1993. It defines “public undertaking” as any undertaking over which the state or other regional or local authorities may directly or indirectly exercise a dominant influence by virtue of their ownership of it, their financial participation in it or the rules which govern it. A dominant influence on the part of the public authorities is presumed when these authorities, directly or indirectly in relation to an undertaking: (i) hold the major part of the undertaking’s subscribed capital; (ii) control the majority of the votes attaching to shares issued by the undertaking; or (iii) can appoint more than half of the members of the undertaking’s administrative, managerial or supervisory body.

The Eurosystem does not publish a specific list of eligible issuers classified as “public undertakings”.

Q1.12 Which sustainability-linked debt instruments became eligible for purchases as of 2021?

For a debt instrument to be eligible for purchase, it had to fulfil at a minimum the eligibility requirements set for Eurosystem collateral. With regard to sustainability-linked debt instruments, our related FAQ page provide clarification on eligibility criteria.

Implementation of purchases

Q2.1 Could asset managers and non-bank financial institutions offer eligible securities for purchase under the APP and PEPP?

Asset managers and non-bank financial institutions were not eligible counterparties and therefore could not directly sell securities to the Eurosystem under the APP and PEPP. However, under the APP and PEPP, the Eurosystem offered its eligible counterparties the possibility to share offers of eligible securities on behalf of non-eligible counterparties, such as asset managers and non-bank financial institutions. Although final responsibility for the offered assets remained entirely with the eligible counterparties, they could include them in the daily inventories of assets they shared with the Eurosystem, either by explicitly reporting which assets were offered on behalf of non-eligible counterparties or aggregating them with their inventories. In periods of heightened investor uncertainty, such as during the COVID-19 pandemic, this option contributed to alleviating market tensions and supporting proper market functioning.

Q2.2 How can I find out more about the Eurosystem’s corporate bond holdings?

Details on CSPP-related corporate bond holdings are published on a weekly, monthly and yearly basis. They include aggregate data, such as total holdings and a breakdown by rating, country and sector. This information is made available in the context of the APP so that observers can gain an insight into the Eurosystem’s overall holdings. In addition, the ECB publishes a detailed list of CSPP corporate bond securities that are held by the Eurosystem, including the national central bank (NCB) that bought the security, the security’s maturity date and its coupon rate. Visit our Frequently asked questions page for more information on disclosures related to the Eurosystem’s corporate security holdings under the PEPP.

Q2.3 Did the Eurosystem target or exclude specific industry sectors?

The eligibility of corporate debt instruments was guided by our monetary policy objective, taking into account appropriate financial risk management considerations. To ensure the effectiveness of monetary policy, the range of eligible debt instruments was deliberately broad.

As announced in July 2022, the Eurosystem aims to gradually decarbonise its corporate bond holdings, on a path aligned with the goals of the Paris Agreement. To that end, the Eurosystem tilted its purchases towards issuers with a better climate performance. Better climate performance is measured with reference to lower greenhouse gas emissions, more ambitious carbon reduction targets and better climate-related disclosures. For more information, please refer to our FAQ page on incorporating climate change considerations into Eurosystem corporate bond purchases.

Q2.4 Who conducted the purchases?

Purchases of corporate sector debt instruments were carried out by six NCBs acting on behalf of the Eurosystem. The ECB coordinated the purchases. The NCBs conducting the purchases were: the Nationale Bank van België/Banque Nationale de Belgique, the Deutsche Bundesbank, the Banco de España, the Banque de France, the Banca d’Italia and Suomen Pankki – Finlands Bank.

Market segments for purchases were allocated to the purchasing NCBs according to the geographical location of the issuer as follows:

Q2.5 What information could counterparties reveal to their clients with regard to Eurosystem transactions?

Counterparties could communicate that the Eurosystem had been operating in the corporate space, the maturity bucket and the sector (e.g. utilities), but not the exact amounts, the issuers of the debt instruments and the securities involved or the Eurosystem member involved.

Q2.6 Did the Eurosystem purchase in the primary market?

Yes. However, as of March 2023, with the start of the period of partial reinvestment, only securities of issuers with a better climate performance and green bonds that complied with a stringent identification process continued to be purchased in the primary market. Therefore, primary market purchases of any other eligible securities were phased out prior to the start of partial reinvestments, i.e. the Eurosystem no longer purchased such securities in the primary market as of March 2023.

Furthermore, for debt instruments issued by public undertakings, no primary market purchases took place, as such purchases are forbidden owing to the prohibition on monetary financing laid down in Article 123 of the Treaty on the Functioning of the European Union.

Q2.7 Does the Eurosystem apply any measures to mitigate potential negative effects on secondary market liquidity?

When conducting transactions, the Eurosystem is mindful of the potential impact of them on market liquidity. When operating in the secondary market, it considers, among other things, the scarcity of specific debt instruments and general market conditions, i.e. maintaining a certain degree of flexibility to also take into account seasonal differences. Furthermore, corporate bond holdings that meet the minimum credit quality requirement are also available for securities lending by the relevant purchasing national central banks, who publish a list of the individual corporate bonds available for lending on a weekly basis without revealing the size of their holdings in each corporate bond.

Q2.8 Could the Eurosystem participate in private placements?

The Eurosystem has not been able to participate in private placements since March 2023.

Q2.9 Are profits and losses shared within the Eurosystem?

In general, income and losses from decentralised monetary policy operations conducted by the Eurosystem are shared. Corporate sector debt instruments are subject to a full profit and loss sharing regime.

Limits and risks

Q3.1 Are there any limits on corporate bond holdings per issue or per issuer group?

The Eurosystem applies a maximum issue share limit of 70% per corporate bond on the basis of the outstanding amount. Lower issue share limits apply in specific cases, for example for corporate bonds issued by public undertakings, which are dealt with in a manner consistent with their treatment under the PSPP. In relation to public undertakings, the Eurosystem is bound by the monetary financing prohibition laid down in Article 123 of the Treaty on the Functioning of the European Union.

During the purchase and reinvestment phases, the Eurosystem applied additional limits per issuer group, following a pre-defined internal benchmark, which ensured a diversified allocation of purchases across issuers, while allowing for sufficient leeway to build up the portfolio. Visit our Frequently ask questions for more information on the limits applicable to commercial paper purchases.

Q3.2 How was an “issuer group” defined?

An issuer group was defined as a group of companies that operate as a single economic entity and constitute a single reporting entity for the purposes of presenting consolidated accounts. The issuer group consisted of the parent company and all of its direct and indirect subsidiaries.

Q3.3 What are the risks of the programmes and are they mitigated? Does the Eurosystem monitor the creditworthiness of the companies behind its bond purchases?

As with any diversified portfolio of credit instruments, risks from the deterioration of issuers’ credit quality or from issuer defaults cannot be entirely excluded. At the same time, the risks of the programme have been kept low in particular by (i) setting minimum credit quality criteria at the time of purchase, (ii) ensuring diversification through issuer group limits, and (iii) by implementing appropriate due diligence procedures and credit risk mitigation measures on an ongoing basis. The Eurosystem also employed other differentiated measures, such as maturity limits for lower-scoring issuers, to mitigate its climate-related financial risk, as stated in the climate change related FAQ. The Eurosystem also applied additional risk management measures as deemed necessary.

Q3.4 What did “market capitalisation” mean in the context of the pre-defined internal benchmark?

The term “market capitalisation”, which was relevant in the context of the pre-defined internal benchmark, refered to the nominal outstanding amount of eligible corporate bonds issued by the issuer in question as a share of the entire eligible universe.

The construction of the benchmark was further complemented by climate change considerations. This allowed the Eurosystem to tilt its corporate bond purchases towards issuers with a better climate performance. For more details on the tilting of Eurosystem corporate bond purchases, see  our dedicated Frequently asked questions page.