Corporate Financing Effects of the ECB’s CSPP: Evidence from Bond Spreads and Firm Leverage

This study evaluates the impact of the ECB’s Corporate Sector Purchase Programme (CSPP) on corporate bond spreads at issuance, as measured by Option-Adjusted Spreads (OAS), and on subsequent changes in firms' capital structures, as proxied by year-on-year changes in the debt ratio. Using a sample of 1,275 Eurozone corporate bonds issued between 2015:Q1 and 2018:Q4, we estimate a two-stage empirical model to evaluate. In the first stage, we find that the initial association between CSPP eligibility and lower spreads disappears once firm- and bond-level characteristics are controlled for, suggesting that observed differences reflect issuer and instrument features rather than programme eligibility. While the CSPP’s effect does not vary systematically by firm or bond characteristics, the results indicate broader market effects, likely driven by the programme’s signaling power and perceived credibility, which extended beyond the impact of direct bond purchases. In the second stage, we assess changes in leverage following the issuance of bonds. CSPP eligibility did not seem to affect the debt ratio in the issuance year. However, longer-maturity eligible bonds are associated with delayed increases in leverage, as firms expanded their debt ratios in the year following issuance. This pattern suggests that improved financing conditions under the programme may have encouraged firms to raise additional debt at a later stage.