BANGALORE (Reuters) - The European Central Bank will buy a total of 200 billion euros of asset-backed securities (ABS) and covered bonds in the span of a year, a Reuters poll of euro money market traders found on Monday.
That is a sharp fall from the 300 billion euros expected in a similar poll on September 8 and a Reuters survey of economists last week. [ECB/REFI][ECB/INT]
After surprising markets with interest rate cuts last month and offering banks more cheap loans to boost lending, the ECB is due to give more details of its plan to buy repackaged loans following its monthly policy meeting on Thursday.
Traders said lacklustre demand from banks earlier this month for the ECB's low-interest long-term loans, known as TLTROs, and the risks of deflation and weak economic growth across the region, will push the central bank to buy government bonds.
"ABS purchases (are) unlikely to be too big or for too long," said a trader at a large dealer. "The ECB needs to buy sovereigns at some point and we think that will be sooner than later, especially after the abysmal take up at the first TLTRO."
Banks have stepped up the pace at which they are returning funds they took from the ECB in late 2011 and early 2012, at the peak of the euro zone's debt crisis, after the ECB started offering the new long-term loans this month.
They are expected to return another 4.5 billion euros of those crisis loans to the ECB next week, slightly less than the 4.9 billion euros banks will pay back this week.
The regular survey of 21 traders also showed the ECB is expected to allot 90 billion euros at its weekly refinancing tender, which will be the lowest amount since March and similar to the 90.3 billion euros maturing this week.
(Reporting by Rahul Karunakar; Polling by Ashrith Doddi and Diptarka Roy; Editing by Catherine Evans)