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By Bloomberg

European Central Bank President Mario Draghi is poised to deliver on Wednesday an update on a month-old bond- buying program that has already changed the face of the region’s government-debt market.

German 10-year yields dropped to a record this week, along with those in five other euro-area nations, as the ECB’s 1.1 trillion euro ($1.2 trillion) quantitative-easing program boosted prices of sovereign securities across the region. The yields on about $2 trillion of euro-denominated sovereign bonds are currently below zero, with $582 million of those below the ECB’s deposit rate of minus 0.2 percent. ECB officials meet in Frankfurt on Wednesday to set monetary policy.

“Draghi will sum up the first month of QE, and I think his summary will be quite positive,” said Daniel Lenz, lead market strategist at DZ Bank AG in Frankfurt. “The ECB has met or even exceeded expectations. It’s our six-month forecast that 10-year bunds will go negative.”

Benchmark German 10-year yields were little changed at 0.14 percent as of 9:10 a.m. London time after touching 0.13 percent on Tuesday, the least since Bloomberg began compiling the data in 1989. The price of the 0.5 percent bund due in February 2025 was 103.535 percent of face value.

Yields on German securities with maturities up to eight years are below zero, while bonds from seven other countries in the currency bloc also have negative yields. Spain, which saw its yields spike in the debt crisis, auctioned short-term bills with a negative yield last week, while Portugal, which required a international bailout, may repeat that feat Wednesday.

Bond Reaction

Portuguese securities led gains on March 5, the day of the ECB’s previous policy meeting, after the central bank revealed details of its QE plan which started four days later. The yield on Portugal’s 10-year bond dropped nine basis points on the day of the meeting, to 1.79 percent, and that on Germany’s fell four basis points to 0.35 percent.

The central bank, which has ruled out buying bonds with yields below its deposit rate, will leave that rate unchanged at Wednesday’s meeting, according to all 39 economists surveyed by Bloomberg. The main refinancing rate will be held at a record- low 0.05 percent, according to a separate survey.

The implied yield on Euribor futures contracts, which give a indication of the outlook for interbank borrowing costs, are negative out to December 2016.

ECB Purchases

The ECB reported purchases of 41.68 billion euros of government debt in March. German buying, at 11.1 billion euros, made up the biggest proportion. French bonds comprised 8.8 billion euros of the purchases and supranational debt 5.7 billion euros, the ECB said.

The average maturity of 8.1 years for German bond purchases in March, one year shorter than Italy’s and three years less than Spain’s.

Twenty-eight percent of German bonds within the two- to thirty-year range have yields below the ECB’s minus 0.2 percent deposit rate, according to Moody’s Investors Service, making them ineligible for the QE program. This share was 5 percent when the ECB announced buying in January.

“The QE program could exhaust the supply of eligible bonds from the governments of Germany, the Netherlands, Finland, France, Austria, Belgium, Ireland and Portugal,” Senior Vice President Marie Diron at Moody’s in London wrote in a note published Tuesday.

The ECB has made some securities available for lending to support bond- and repurchase-market liquidity. The lending program will do little to improve the shortage of government debt that firms are able to use for collateral, according to Barclays Plc and JPMorgan Chase & Co.

Germany is scheduled to sell 4 billion euros of 10-year bunds on Wednesday. The previous auction of the securities on March 18 drew a record-low average yield of 0.25 percent. Investors bid for 2.37 times the amount of bonds allotted last month, the highest since 2002.