CYPRUS: ECB to lift Cyprus waiver for QE

The Governing Council of the European Central Bank (ECB) decided to lift the waiver for Cyprus, regarding its bond-buying programme, after a meeting on March 16.

 
The waiver, according to which Cyprus could participate in the ECB’s quantitative easing programme without meeting the minimum credit quality thresholds, will be lifted by April 1. It had allowed the ECB to accept Cyprus government bonds as guarantees to provide liquidity to the banking institutions. The ECB had waived the minimum credit rating requirement for Cyprus, but the waiver was conditional on the country’s being in a programme. After the end of the bailout the ECB will have to stop buying Cypriot government bonds.
The minimum credit quality thresholds will once again apply for Cyprus from 1 April, meaning that Cyprus would have to return to the investment grade of international credit houses in order to benefit from the ECB’s quantitative easing programme. The sovereign rating are currently three notches below investment grade.
Under the programme, the ECB has bought Cypriot government bonds amounting to EUR 285 mln.