Dealers call for ECB to buy inflation bonds as Italy faces exit from key index

Further downgrades for Italy would cause its inflation-linked bonds to drop out of a Barclays Capital index, prompting mass selling by fund managers, dealers fear

Dealers are lobbying the European Central Bank (ECB) to expand its bond-buying remit to include inflation-linked debt, amid fears further downgrades for Italy would see its linkers excluded from a key Barclays Capital index – prompting mass sales by fund managers. Italian debt makes up more than a quarter of the index, but Barclays Capital confirms no exception would be made for the country.

The rules of the Barclays Capital euro government inflation-linked bond index state linkers are excluded