In an effort to mitigate impact of possible ratings downgrades on collateral availability, the European Central Bank says it will "grandfather until September 2021 eligibility of marketable assets used as collateral in Eurosystem credit operations falling below current minimum credit quality requirements."

As we noted below, this is all being done to avoid (among other things) a potential catastrophe when Italy is downgraded to junk (expected Friday).

Full ECB Statement below:

ECB to grandfather until September 2021 eligibility of marketable assets used as collateral in Eurosystem credit operations falling below current minimum credit quality requirements

Appropriate haircuts will apply for assets that fall below the Eurosystem minimum credit quality requirements

Decision reinforces broader package of collateral easing measures adopted by the Governing Council on 7 April 2020, which will also remain in place until September 2021

ECB may decide further measures, if needed, to continue ensuring the smooth transmission of its monetary policy in all jurisdictions of the euro area