The Southern countries appear to be the main beneficiaries of the flexible PEPP bond reinvestment program, which was activated on July 1 using funds from the North. The ECB bought bonds from Spain, Italy, Greece and Portugal with proceeds from the redemption of bonds from Germany, France and the Netherlands, according to official data it released on Tuesday for the June-July period, in a first but so far unclear sign of the ECB’s determination to support the region.

In particular, during this period (July is only the month of reinvestment), the ECB bought Italian bonds for 9.762 billion euros, Spanish bonds for 5.914 billion euros, Greek bonds for 1.089 billion euros and Portuguese bonds for 514 million euros, i.e. general. In the remaining 15 eurozone countries, bond purchases were minimal, totaling 899 million euros, and in some countries there were no purchases at all (Cyprus, Estonia, Latvia, Slovakia).

In the same period, the ECB actually “sold” only the bonds of Germany, the Netherlands and France (with maturity). In more detail, PEPP net purchases of German bonds were -14.279 billion euros, Dutch bonds -3.383 billion euros and French bonds -1.213 billion euros, for a total of -18.9 billion euros, while there were no other negative net purchases.

With funds from the maturities of German, French and Dutch securities.

The above confirms initial reports of the ECB’s intention to move key funds from the north to the south of the eurozone in order to prevent another surge in borrowing costs in the region amid monetary tightening, keep spreads “under control” and eliminate the risk of a new debt crisis.

The ECB data is published every two months, so since there were no flexible reinvestments in June (only simple reinvestments), it is difficult to assess how “aggressive” the ECB’s support was. PEPPs are estimated to have an average monthly maturity of €17bn, of which €12bn is in major countries.

In any case, the ECB has said the flexible PEPP reinvestment program is its first line of defense, and is already supporting bond yields and spreads. The approval of the new TPI tool in July certainly helped… slow down investors’ attacks on the market, however, the yield of Italian bonds has now fallen below 3% (against 4.3% on June 14), and the spread has stabilized. around 220 basis points, the ECB’s “wish” not to use TPI is currently being fulfilled.