Asset Purchase Facility: Gilt Purchases - Market Notice 4 February 2021

On 3 February 2021 the MPC voted to maintain the target stock of purchased UK government bonds, financed by the issuance of central bank reserves, at £875 billion.
Published on 04 February 2021

The existing programme of £150 billion of UK government bond purchases had started in January and the Committee continued to expect it to be completed by around the end of 2021. The Committee continued to envisage that the pace of purchases could remain at around its current level initially, with flexibility to slow the pace of purchases later. 

Asset Purchase Facility: Gilt Purchases

This market notice sets out details of the Bank’s planned APF gilt purchases taking place from the week commencing 8 February 2021 up to and including the week commencing 15 March 2021 – which is the week of the MPC’s March meeting. It covers the ongoing £150bn gilt purchases announced in November 2020 and the reinvestment of proceeds of a gilt maturity occurring on 22 January 2021 as set out in December 2020 market notice.

The Bank intends to purchase evenly across the three gilt maturity sectors.  For operations scheduled between 8 February 2021 and 17 March 2021 the planned size of auctions will be £1.48bn for each maturity sector.  The range of gilts eligible for purchase will remain unchanged from previous operations.

The Bank plans to conduct three 30 minute auctions a week: gilts with a residual maturity of 3-7 years will be purchased on Mondays at 14:15; those with a residual maturity of over 20 years will be purchased on Tuesdays at 14:15; and those with a residual maturity of 7-20 years will be purchased on Wednesdays at 14:15. All times are London time.

A further Market Notice will be published alongside the March MPC minutes explaining the operational approach to gilt purchases for the subsequent maintenance period.

As usual, the size of auctions will be kept under review throughout the purchase programme in light of market conditions.

The Bank will confirm details of the following week’s operations each Thursday at 16.00 (London time). The Bank does not currently intend to purchase gilts where the Bank holds more than 70% of the “free float”, i.e. the total amount in issue minus government holdings.  The Bank will, however, continue to keep the gilts eligible for purchase by the APF under review. 

Other than as amended by this Market Notice, previous Market Notices relating to the Bank’s gilt purchases under the APF will apply.