The European Central Bank will aim to start small when it begins buying corporate debt in June, seeking first to lure new issuers and then slowly raise the monthly pace of purchases to €5-10 billion, several central bank sources have told Reuters.

Investment-grade corporate bonds issued in euros are the latest addition to a growing list of assets the ECB is buying as part of its €1.74 trillion effort to boost economic growth in the eurozone via lower borrowing costs.

The difficulty is that the €600 billion market for such notes is largely limited to big corporations in France and the Netherlands that already enjoy easy access to credit.

The ECB, however, is hoping its money will eventually trickle down to smaller borrowers across the eurozone for whom funding is still a problem. Since this is likely to take time, the ECB will increase the pace of its purchases only gradually and refrain from setting a monthly target, conversations with seven sources in or near the ECB’s decision-making body revealed.

“There could be big fluctuations in buys but if we succeed in inducing issuance, that would naturally smooth out the market,” one sources said. Another source said there might be months when purchases will be in the region of just €1 billion.

There could be big fluctuations in buys

France and the Netherlands, which account for 57 per cent of the bonds that the ECB can buy according to Fitch Ratings, will initially be the main focus of the purchases, the sources said.

But the bank hopes to broaden the scope of the programme once supply in other countries, such as Spain and Italy, picks up.

One of the aims of the programme, indeed, is to encourage medium-sized companies, which have traditionally relied on bank loans, to issue bonds.

This would free up bank cash and indirectly force lenders to look for clients among enterprises that are too small to tap financial markets directly, the ECB hopes.

Creating this trickle-down effect will be crucial if the programme is to succeed and would address the criticism that it may simply supply more money to already well-funded companies that can borrow cheaply.

In the meantime, while the ECB has yet to buy a single corporate bond, the mere announcement has had an effect on supply. Since the second week of March, when the ECB unveiled the programme, non-financial companies in Europe have issued around €61 billion worth of euro-denominated bonds.