Asset Purchase Facility Quarterly Report - 2020 Q4

In the interests of openness and transparency, we publish a quarterly report on the transactions carried out as part of the Asset Purchase Facility. The reports are published shortly after the end of each quarter.
Published on 25 January 2021

Overview

This report contains information on the Bank of England’s Asset Purchase Facility (APF) for 2020 Q4, describing operations from 1 October 2020 to 31 December 2020. 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.

On 5 November, the Monetary Policy Committee (MPC) announced it had voted to increase the Bank of England’s holdings of UK government bonds, financed by the issuance of central bank reserves, by an additional £150 billion, to take the total target stock of UK gilts and sterling non-financial investment-grade corporate bonds to £895 billion.footnote [1] Further details are contained in Market Notices published on 5 November 2020 and 17 December 2020.

During 2020 Q4 the APF made £48.6 billion of gilt purchases.footnote [2] Details of the purchase programme for this period can be found in the Market Notice published Market Notice published on 6 August 2020.

The APF also made £0.1 billion of corporate bond purchases in 2020 Q4.

Table A summarises the stock of APF gilt and corporate bond purchases in 2020 Q4.

Table A: Summary of stocks in Asset Purchase Facility Schemes (a) (£ millions)

Week ending

Gilts (b)

Corporate bond purchase scheme (c)

2020 Q3 (d)

674,858

19,703 

7 October 2020

679,277

20,063

14 October 2020

683,695

20,063

21 October 2020

688,114

20,063

28 October 2020

692,533

20,063

4 November 2020

696,952

20,059

11 November 2020

701,371

20,059

18 November 2020

705,790

20,059

25 November 2020

711,681

20,059

2 December 2020

714,627

19,984

9 December 2020

719,046

19,984

16 December 2020

723,464

19,984

23 December 2020

724,937

19,984

30 December 2020

724,937

19,984

Footnotes

  • 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 Q3 measured as the amount outstanding as at 30 September 2020.

Chart 1 shows the cumulative net value of APF transactions between the establishment of the Fund and end-December 2020. As at 31 December 2020, the Bank had reported cumulative assets purchases net of sales, redemptions and repayments totalled £744.9 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 its transfer to the Bank’s balance sheet) are on the left panel.footnote [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.footnote [4]

Chart 1 Cumulative APF purchases by type: amounts outstanding (a)(b)

Cumulative APF purchases amounts outstanding split by type to 2020 Q4. The left chart shows a further increase in Gilt purchases – reserves financed, at a steeper pace initially, reaching over £700 billion by the end of the chart. The Term Funding Scheme remains flat at zero.
The right Area chart shows the cumulative net value of APF transactions split by type to 2020 Q4. Specifically, the corporate bond purchase scheme (CBPS) and legacy commercial paper schemes operated via the APF. The CBPS saw a slight increase in Q4, reaching around £20 billion, while older schemes remain at zero.

Footnotes

  • 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 31 December 2020 was £1.8 billion.

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 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 the total stock of asset purchases to £745 billion.
  • 5 November 2020 MPC agrees to expand the APF with a £150 billion increase to the stock of UK gilts to reach the total stock of asset purchases to £895 billion.

Links to additional information related to the APF


Next publication date: 26 April 2021

  1. Access past minutes and decisions by the MPC on our website.

  2. You can find further details in our results and usage data.

  3. The Bank launched the Term Funding scheme with additional incentives for Small and Medium-sized Enterprises (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.

  4. 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 consolidated Market Notice. You can find data on the CCFF in our results and usage data.

Next publication date: 26 April 2021

ISSN 2041-1936

Give your feedback

Was this page useful?
Yes
No
Add your details...