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.