Asset Purchase Facility Quarterly Report - 2022 Q1

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 April 2022

Overview

This report contains information on the Bank of England’s Asset Purchase Facility (APF) for 2022 Q1, describing operations from 1 January 2022 to 31 March 2022. 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.

In January, the APF continued the corporate bond reinvestment programme started in 2021 Q4. This resulted in the stock of holdings rising to £19,992 million by 26 January. You can find further details in the Market Notices published on 5 November and 23 November 2021.

At its meeting ending on 3 February, the Monetary Policy Committee (MPC) voted to begin to reduce the stock of UK government bond purchases, financed by the issuance of central bank reserves, by ceasing to reinvest maturing assets. The Committee also voted to begin to reduce the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, by ceasing to reinvest maturing assets and by a programme of corporate bond sales to be completed no earlier than towards the end of 2023.footnote [1]

As of 9 March 2022, and following the maturity of the March 2022 gilt previously held by the APF, the total stock of assets held in the APF was £866.8 billion. This was made up of £847.0 billion of UK government bond purchases and £19.8 billion of sterling non-financial investment-grade corporate bond purchases.

Table A summarises the stock of APF gilt and corporate bond purchases in 2022 Q1.

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

Week ending

Gilts (b)

Corporate bond purchase scheme (c)

2021 Q4 (d)

874,947

19,706

5 January 2022

874,947

19,706

12 January 2022

874,947

19,756

19 January 2022

874,947

19,850

26 January 2022

874,947

19,992

2 February 2022

874,947

19,992

9 February 2022

874,947

16 February 2022

874,947

23 February 2022

874,947

2 March 2022

874,947

19,842

9 March 2022

847,006

16 March 2022

847,006

23 March 2022

847,006

30 March 2022

847,006

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, net of sales and redemptions, valued at initial purchase price.
  • (c) The overall stock of APF Corporate Bond Purchase Scheme purchases, net of sales and redemptions, valued at initial purchase price.
  • (d) 2021 Q4 measured as the amount outstanding as at 29 December 2021.

Chart 1 shows the cumulative net value of APF transactions between the establishment of the Fund and end-March 2022. As at 31 March 2022, the Bank had reported cumulative asset purchases net of sales, redemptions and repayments totalling £866.8 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 its transfer to the Bank’s balance sheet) are on the left panel.footnote [2] 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 [3]

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

Left chart shows an increase from 2009 to 2020 in purchases of gilts financed by reserves. The increase is driven by three main periods of gilt purchases. The most rapid increase comes in March 2020, which then slows somewhat and continues roughly consistently to the end of the data period. The graph also includes a line for the Term Funding Scheme, which begins in late 2016 and rises to over £100 billion around the end of 2017, before falling to £0 in early 2019. TFS Drawings were moved to from the APF the Bank’s balance sheet as of January 2019, footnote (B).
Right chart shows amounts outstanding in the DMO financed Secured commercial paper, Commercial paper and Corporate bonds, as well as, reserves financed purchases of commercial paper and corporate bonds since 2009. The Corporate Bond Purchase Scheme, launched in 2016, is the dominant data series. The chart shows a rapid increase for this series in 2016 following the introduction of the CBPS, and a steep increase from March 2020 to October 2020 when a new investment programme took place. The earlier schemes are much smaller by comparison, and all rise and fall back to £0 between 2009 and mid-2012.

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 March 2022 was £12.4 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 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 announces decision to expand the APF with a £100 billion increase to the stock of UK gilts to bring the total stock of asset purchases to £745 billion.
  • 5 November 2020 MPC announces decision to expand the APF with a £150 billion increase to the stock of UK gilts to bring the total stock of asset purchases to £895 billion.
  • 3 February 2022 MPC votes to begin to reduce the stock of UK government bond purchases by ceasing to reinvest maturing assets, and the stock of sterling non-financial investment-grade corporate bond purchases by ceasing to reinvest maturing assets and by a programme of corporate bond sales. The latter to be completed no earlier than towards the end of 2023, and that should unwind fully the stock of corporate bond purchases.

Links to additional information related to the APF

Next publication date: 25 July 2022.

ISSN 2041-1936

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

  2. 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.

  3. 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.

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