###From 2018, the ECB cuts APP from........>

ECB VIEW: ###From 2018, the ECB cuts APP from E60bln to E30bln but redemptions

matter. Below is MNI's calculation of gross buying changes from Q4 to Q1.

- Recently in the APP, the ECB spent E50bln on EGBs, E7bln on corporate bonds,

E3bln on covered bonds and tiny amounts of ABS.

- Across all programmes, redemptions amount to a monthly average of E7.7bln in

Q1 2018, up slightly from the E4.9bln average in Q4 2017. 

- ECB speakers hint that private sector bonds will be purchased in a greater net

percentage of the total APP than now. 

- Arbitrarily assuming that the private sector programmes will be 80% of the

2017 net buying, then net PSPP buying falls from E50bln per month to E22bln. 

- If we then include reinvested redemptions, then gross buying for PSPP drops

from a monthly average of around E53.6bln in Q4 to E26.9bln in Q1 next year

(roughly half), although numbers rise as redemptions ramp up later in the year.

For covered bonds, the numbers are E3.3bln in Q4, rising to E3.8bln in Q1 and

E7.1bln for corporates in Q4 and E5.8bln in Q1. These are not forecasts, just

reasonable assumptions.