Investment-grade bonds that have been downgraded to a rating of at least BB are now eligible for use as collateral in eurozone credit operations, the European Central Bank said.
The move will increase the amount of available, eligible collateral in light of ongoing corporate-credit rating downgrades as a result of the coronavirus pandemic, the bank said Wednesday. The ECB hopes the measures will provide additional liquidity and funding to the eurozone economy.
The use of these bonds — known as fallen angels — as collateral will last until September 2021, the ECB said.
Prior to the ECB's decision investment-grade bonds with a rating of at least BBB- were considered eligible collateral.
The announcement follows a broader easing of collateral rules adopted by the ECB's governing council on April 7, which included a temporary increase in the central bank's risk tolerance.