Overview
This report contains information on the Bank of England’s Asset Purchase Facility (APF) for Q2 from 1 April 2020 to 30 June 2020. It describes the operations carried out during the period. More information on what the APF is and what it does is available in our Market Operations Guide. A short timeline describing the history of the APF is provided as background at the end of the report.
APF operations in the past quarter
This section contains details of gilt and corporate bond transactions, and gilts lent to the Debt Management Office (DMO), during the quarter. At its meeting on 17 June, the Monetary Policy Committee (MPC) voted to increase the Bank of England’s holdings of UK government bonds, financed by the issuance of central bank reserves, by an additional £100 billion, to take the total target stock of asset purchases to £745 billion.[1]
During 2020 Q2 the APF made £167.8 billion of gilt purchases.[2] Details of the most recent purchase programme can be found in the Market Notice published on 18 June 2020.
The APF also made £6.1 billion of corporate bond purchases in 2020 Q2, starting on 7 April 2020. You can find further details in the Market Notices published on 2 April 2020 and 1 May 2020.
Table A summarises the stock of APF gilt and corporate bond purchases in 2020 Q2.
Table A Summary of stocks in Asset Purchase Facility Schemes (a) (£ millions)
Week ending | Gilts (b) | Corporate bond purchase scheme (c) |
2020 Q1 (d) | 437,999 |
|
1 April 2020 | 448,498 | 9,780 |
8 April 2020 | 461,998 | 9,780 |
15 April 2020 | 475,497 | 10,476 |
22 April 2020 | 488,996 | 10,956 |
29 April 2020 | 502,495 | 11,778 |
6 May 2020 | 515,994 | 12,295 |
13 May 2020 | 529,493 | 12,953 |
20 May 2020 | 542,992 | 13,808 |
27 May 2020 | 556,491 | 14,326 |
3 June 2020 | 569,990 | 14,537 |
10 June 2020 | 583,489 | 15,000 |
17 June 2020 | 596,989 | 15,520 |
24 June 2020 | 609,441 | 15,919 |
30 June 2020 | 612,894 |
Source: Bank of England.
(a) The outstanding amount in each facility is reported on a settlement date basis.
(b) The overall stock of APF gilt purchases, less redemptions, valued at initial purchase price.
(c) The overall stock of APF Corporate Bond Purchase Scheme purchases, less redemptions, valued at initial purchase price.
(d) 2020 Q1 measured as the amount outstanding as at 25 March 2020.
Chart 1 shows the cumulative net value of APF transactions between the establishment of the Fund and end-June 2020. As at 30 June 2020, cumulative assets purchased net of sales, redemptions and repayments totalled £628.8 billion.
Chart 1 is separated into two panels with different scales. Gilt purchases and the Term Funding Scheme (TFS — which from 2016 to 2019 was on the APF balance sheet before transfer to the Bank’s balance sheet) are on the left panel.[3] The corporate bond schemes and legacy commercial paper schemes that have been operated via the APF balance sheet are on the right panel. The Covid Corporate Financing Facility (CCFF), which was launched in March 2020, is not part of the APF balance sheet.[4]
Chart 1 Cumulative APF purchases by type: amounts outstanding (a)
Source: Bank of England.
(a) Data based on settled transactions.
(b) On 21 January 2019 the TFS drawings were moved to the Bank’s balance sheet and therefore are not reported after this date.
Gilts purchased via the APF continue to be made available for on-lending to the market through the gilt lending arrangement with the DMO. The average daily aggregate value of gilts lent by the APF to the DMO during the three months to 30 June 2020 was £4.7 billion.
To ensure the supply of gilts via the gilt lending arrangement remains sufficient to accommodate greater demand from the DMO or from market participants, the Bank more than doubled the total percentage of the APF’s gilt holdings made available each day. You can find more details in the statement made on 22nd April 2020.
APF history and background
Below is a summary of some of the key milestones in the history of the APF since its establishment in 2009.
• 19 January 2009 Chancellor’s Statement announcing the intention to set up an asset purchase programme.
• 29 January 2009 Establishment of the APF Fund (see exchange of letters between the Bank and HM Treasury).
• 9 November 2012 HM Treasury announces the transfer of gilt coupon payments to the Exchequer (see exchange of letters between the Bank and HM Treasury).
• 4 August 2016 MPC agrees to expand the APF by launching a Term Funding Scheme (TFS) and a Corporate Bond Purchase Scheme (CBPS) (see exchange of letters between the Bank and HM Treasury).
• 21 June 2018 Bank and HM Treasury agree new capital and income framework codified by a new Memorandum of Understanding.
• 21 January 2019 TFS drawings (and collateral) transferred from the APF to the Bank of England’s balance sheet.
• 19 March 2020 MPC agrees to expand the APF with a £200 billion increase to the stock of UK gilts and sterling non-financial investment-grade corporate bonds to reach £645 billion.
• 18 June 2020 MPC agrees to expand the APF with a £100 billion increase to the stock of UK gilts to reach £745 billion.
Links to additional information related to the APF
• Exchange of letters between the Bank and HM Treasury, 17 February and 3 March 2009.
• Asset Purchase Facility Annual Report 2019/20.
Access past minutes and decisions by the MPC on our website.
You can find further details in our results and usage data.
The Bank launched the Term Funding Scheme with incentives for SME lending (TFSME) during April 2020. The TFSME does not appear in this report because it is operated from the Bank’s balance sheet, rather than the APF.
The CCFF is operated by the Covid Corporate Financing Facility Limited (the Fund). Further details on the operation of the Fund can be found in the Market Notice published on 22 June 2020. You can find data on the CCFF in our results and usage data.
