Corporate Bond Purchase Scheme: design, operation and impact

Quarterly Bulletin 2017 Q3
Published on 15 September 2017

By Thomas Belsham, Alex Rattan and Rebecca Maher

  • In August 2016 the Bank of England’s Monetary Policy Committee voted for a package of measures to support growth and return inflation to target. The measures included the purchase, via the Corporate Bond Purchase Scheme (CBPS), of up to £10 billion of UK corporate bonds.
  • The design of the CBPS was driven by considerations of market structure and the ultimate aim of imparting broad macroeconomic stimulus. The CBPS departed from past asset purchase programmes along a number of key dimensions, including the size of allocations and auction pricing.
  • The scheme appears to have had a positive impact on the sterling corporate bond market, prompting a sharp decline in corporate bond spreads on the day of the announcement and a rise in issuance in the months that followed.

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