European Taxpayers Now On The Hook For Junk Debt As ECB Bond-Buying Debacle Builds

Jon Alternative Media, Blogosphere, Economy

Back on March 10, when the ECB stunned the world and announced it would monetize corporate debt, we laid out a snapshot of the total size of Europe’s Investment Grade bond market…
And added that “It is unclear what happens to those IG bonds that the ECB has purchased if and when they get downgraded to junk.”
We are about to find out.
“Picking winners” was never a good idea for policymakers – no matter what the economics textbooks say – and now the ‘market’ has given the ECB a big headache. Draghi’s corporate-bond-buying scheme has backfired as the European Central Bank finds itself holding junk bonds in its so-called ‘stimulus’ plan after K S AG was downgraded by S&P (sending its price plunging).

This post was published at Zero Hedge on Oct 21, 2016.