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ECB add fallen angels: More could follow
The European central bank held a call last night to discuss whether or not to include junk bonds in its collateral framework. It was a very general discussion, which has ‘Italy’ written all over it. Markets expect S&P to come up with an updated rating for Italy later this week, and there is a risk that Italian debt could start its slide to junk status. This discussion comes a week ahead of the next ECB meeting on 30 April and has increased speculation about additional measures the central bank could take to limit an ‘unwarranted’ widening of spreads. The precedent set last week by the Federal Reserve when it ... (full story)