Asset Purchase Facility: Gilt Sales – Market Notice 23 June 2023

Market notice

The Bank intends to sell a total of £2.37bn in each of the short, medium and long maturity sectors during Q3, spread across three auctions in each sector. Auctions will commence on 3 July for short maturity gilts, 17 July for medium maturity gilts and 24 July for long maturity gilts.

The Bank set out in the consolidated APF gilt sales Market Notice published on 1 September 2022 that it would publish a quarterly schedule for the sales of gilts held in the Asset Purchase Facility (APF) for monetary policy purposes. The details and schedule for the Q3 2023 sales of such gilts are set out in this Market Notice which covers the period from 3 July 2023 to the week commencing 25 September 2023. 

At its September 2022 meeting, the MPC voted to reduce the stock of purchased gilts held in the APF by £80bn over the subsequent twelve month period. £7.11bn of sales in Q3 will allow the Bank to deliver the MPC’s £80bn target, based on the current market value of APF gilt holdings. 

In Q3 2023, the Bank will continue to sell gilts evenly across short, medium and long maturity buckets. These sectors are defined as gilts with a residual maturity of between: 3-7 years (short), 7-20 years (medium); and over 20 years (long). 

During Q3 2023, the Bank intends to hold three gilt sale auctions in each of these three sectors, with a planned size of £790mn per auction. The dates of the individual auctions are specified in the table below. Auctions will commence on 3 July for short maturity gilts, 17 July for medium maturity gilts and 24 July for long maturity gilts. 

In the consolidated APF gilt sales Market Notice published on 1 September 2022 the Bank noted that it expected to hold an auction in each maturity bucket once per fortnight. Reflecting the total sales proceeds remaining to meet the MPC’s target, our approach in Q3 will be to hold an auction in each maturity bucket once per calendar month. 

This is the final quarter of the period over which the MPC’s £80bn target set in September 2022 applies. Accordingly, it may be necessary to make some adjustment to the sales programme during the quarter should movements in gilt market prices mean that the amount of gilts the Bank needs to sell to meet the target changes. In order to minimise any disturbance to the predictability of the programme, the Bank’s preference, should an adjustment prove necessary, would be to alter the size of the final three auctions only, and to do so in a way that maintains equal sales amounts across those three buckets. The Bank will provide the market with advance notice of any adjustment.

Other than as amended in this Market Notice, the detailed operational parameters and participation requirements set out previously will apply to these gilt sales.

The Bank will continue to monitor the impact of its gilt sales programme on market conditions, and reserves the right to amend its schedule, including the gilts to be sold and the size of its auctions, or any other aspect of its approach at its sole discretion.

The Bank intends to communicate any future sales schedules for 2023 Q4 or beyond following the MPC’s annual review of the reduction in the stock of purchased gilts over the next twelve-month period, which is expected to be announced alongside the MPC meeting on 21 September 2023. 

Table: APF gilt sales auction calendar – July to September 2023