ECB increasing QE purchases, easier said than done

The two options of extending or expanding  QE purchases seem nice and easy, but the issue limit could eventually become an issue for the ECB. This is already a problem with the 60bn purchases per month, why ECB raised the issue cap from to 33% from 25%, although as we read it, it will most likely only be the case for non-CAC bonds. 

In new bonds that has a CAC, ECB will still only buy up to 25% in each ISIN. Among the core countries Finland is set to be the first country to hit the 25% ISIN limit in Q1 2017 with the current pace of purchases. 

Germany is just behind and approaching the 25% limit around mid-2017, if purchases were kept at 60bn per month. As we approach this point, the ECB is likely to begin bias purchases towards the older non-CAC bonds.

"The ECB could be approaching the issue limits even earlier in Spain and Portugal due to SMP holdings (and other Eurosystem holdings). At this point it is unlikely that the ECB will raise or alter the issue limit, as it would be legally difficult for it to hold a larger share of bonds as it could result in the ECB holding a blocking majority under a potential restructuring", says Danske Bank.