Asset Purchase Facility: Corporate Bond Purchase Scheme - Market Notice 3 August 2017

The Bank is today announcing its approach to reinvesting the cash flows associated with reductions in the outstanding stock of assets in the Corporate Bond Purchase Scheme (CBPS). The frequency of stock announcements is also being updated. This Market Notice sets out the details of these changes.
Published on 03 August 2017
2. There are a number of factors which could result in a reduction in the outstanding stock of CBPS assets, such as redemptions, mandatory or voluntary corporate actions, a material change in an issuer’s risk profile, and/or a material change in the eligibility of a given issuer.

3. The Bank intends to periodically reinvest the cash flows associated with a reduction in the stock of CBPS assets back into eligible corporate bonds, as required to meet the target stock of purchases as determined by the Bank’s Monetary Policy Committee. The Bank intends to conduct purchases in the secondary market by holding reverse auction operations.

4. Reinvestments will take place once the Bank determines the required reinvestment has reached a sufficient size to allow an auction programme to be conducted; based on the current profile of the portfolio, the first such auctions would be expected to take place in H2 2019.

5. The Bank will give notice to participants ahead of any corporate bond auctions via a Market Notice.

6. As the DMO has ceased to publish intraday gilt yields, the reference gilt yields in future CBPS auctions will be set for each bond as the market mid yields as published by Tradeweb at 11.45 London time.

7. As the Bank is not currently making purchases of corporate bonds, from 3 August 2017 the Bank will publish the aggregate total stock of APF corporate bonds purchased on the first Thursday of each month, until further notice.

8. Other than as amended by this Market Notice, previous Market Notices relating to the APF CBPS will continue to apply.

Other notices