Mario Draghi’s soothing words on the perceived scarcity of euro-area bonds have done little to dispel concern that the European Central Bank’s quantitative easing is snarling up a key part of the debt market’s plumbing.

A glance at the German repurchase market suggests the availability of bonds as collateral for loans is drying up, according to Subhrajit Banerjee, a fixed-income strategist at HSBC Holdings Plc in London. The risk is that this will start a chain-reaction that shrivels liquidity in the cash-bond market, he wrote in a research report on Thursday.

That contrasts with the view of ECB President Draghi, who said on Wednesday that it’s “really premature” to ask about scarcity in the bond market. Policy makers “don’t see any such phenomenon,” he said in a press briefing in Frankfurt in response to questions on the impact of the 1.1-trillion euro ($1.2 trillion) bond-buying program.

Repurchase agreements, or repos, are used for short-term funding, with debt used as collateral for loans. General collateral rates for such transactions are negative and near record lows, according to Banerjee, meaning traders are paying to borrow the bonds, rather than receiving cash loans in exchange for the securities. The rates are more typically positive.

“It is strange to see that the ECB does not find evidence of a collateral squeeze in the eurosystem when the German GC rates are near all-time lows,” Banerjee wrote in the note.

The ECB has introduced a bond-lending program to complement its plan to buy 60 billion euros of public debt a month, in order to support market liquidity. Analysts at Barclays Plc and JPMorgan Chase & Co. have said that will do little to improve the shortage of government securities because it’s too expensive.

A functioning repo market is an important reason for the high liquidity in government bond markets, according to Kim Liu, a fixed-income strategist at ABN Amro NV in Amsterdam.

“If you would lower the outstanding available debt and also decrease the functioning of the repo market, going forward liquidity would also deteriorate in the cash bond market,” Liu said. “It would also mean the ECB would have to push harder to buy those bonds. It’s a bit of a vicious cycle.”

In addition to negative rates for repo trades, general collateral curves are inverted, meaning it costs more to borrow the bonds for a year than for a month.

Academic papers have suggested an inversion in repo market curves is a strong signal that an increasing number of securities will trade “special,” a term to describe those that are particularly expensive relative to general collateral rates, HSBC’s Banerjee wrote. If this happens most of the cash bond market would become illiquid, he wrote.

Yields on government bonds already point to elevated demand. The average yield on German government debt dropped below zero for the first time this week. Negative yields mean buyers of the securities would get back less than they paid if they held them to maturity.