FRANKFURT (Reuters) - The European Central Bank said it had sold another O2-Telefonica (O2Dn.DE) bond last week after realising it broke the rules of the stimulus programme under which it was bought.
The sale took place just after a sharp fall in the price of the bond, suggesting investors might have been anticipating the ECB move after it shed its other O2-Telefonica bond
Critics of the ECB's credit-buying programme say that it is too risky for a central bank and outside its area of expertise.
Both bonds were retrospectively deemed in breach of the ECB's rules because they offer a "step up" coupon, which increases if the telecoms company is taken over and the credit-worthiness of its guarantor downgraded.
The ECB is only allowed to buy bonds whose payouts are either pre-determined or track an index, such as Euribor or inflation.
It is the fourth time the ECB has been forced to sell a bond after spotting a rule breach, with previous cases involving debt issued by French chemical group Arkema (AKE.PA) and Belgian mobile telecoms provider Proximus (PROX.BR).
(Reporting by Francesco Canepa; Editing by Alexander Smith)