And they could indirectly – through a sort of “trickling down” effect – make credit more abundant and less expensive for smaller firms by increasing the scope for banks to redirect credit provision from larger to smaller enterprises. Also, very low market-based funding costs might incentivise mediumsized firms to replace more expensive bank lending by issuing bonds.
But compared to other asset classes, the market for NFC bonds is relatively thin and quite heterogeneous across the euro area. This could imply that potential portfolio rebalancing and signalling effects would be contained.