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ECB sells Steinhoff bond at loss after scandal

Reuters  |  FRANKFURT 

By Francesco Canepa

(Reuters) - The European Central sold its of scandal-hit South African retailer last week, data showed on Monday, potentially losing more than half the amount it had invested.

Steinhoff, the owner of brands such as and Poundland, revealed "accounting irregularity" last month.

The pummelled its shares and and revived worries about ECB's purchases of company debt under its stimulus programme.

The was facing the risk of having its investment, a small item in its 2.55 trillion euros ($3.05 trillion) scheme, wiped out or converted into shares.

At one point last week, Steinhoff's bond was worth as little as 45 percent of the value at which it was issued last July, when the bought it.

But the credit, which was still part of the ECB's holdings on Jan 2, no longer featured on a list of published on Monday. The does not disclose the price at which it buys or sells its investments.

said at a conference on Dec 8 that Frankfurt's loss on was small compared to its income but rate-setters would consult on what to do with the holding.

The ECB's purchases of credit, a small but growing component of its quantitative easing scheme, are aimed at lowering borrowing costs for entrepreneurs but critics say they enrich large companies while endangering the public purse.

The central does not pick companies and instead aims to buy in proportion to the amount outstanding on the market, provided that they are denominated in euros and issued by firms that are rated as "investment grade" and are not banks.

It previously sold issued by British mining firm after a change in domicile meant the entity that issued the bond was no longer based in the euro zone.

Steinhoff's chief stepped down last week to focus on helping the retailer plug the hole in its finances.

was called in last month to help shore up finances as lenders have started restricting access to credit lines and insurers are cancelling or reducing

More than $10 billion has been wiped off Steinhoff's market value following the disclosure of the scandal that has claimed the heads of and

($1 = 0.8355 euros)

(Reporting By Francesco Canepa; Editing by Balazs Koranyi)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 22:43 IST
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