As part of the European Central Bank's efforts to try and stimulate the European economy, it has spent around $129 billion buying corporate bonds. These bond purchases fall under the bank's Asset Purchase Program.
As the program is supposed to be a regional stimulus, the bank cannot pick and chose which bonds it wants to buy; the only guidance is that bonds can only be purchased if they have at least one IG rating from Moody’s, S&P, Fitch or DBRS. The Eurosystem is not a forced seller if bonds are downgraded below IG.
Such a broad non-fundamentals based strategy was always going to come with risks; something policymakers have acknowledged:
"As on any diversified portfolio of credit instruments, risks...
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