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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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