Asset Purchase Facility: corporate bond sales programme – Market Notice 6 April 2023

Market Notice

At its February 2022 meeting, the Monetary Policy Committee (MPC) instructed the Bank of England (the Bank) to cease reinvestment of corporate bonds held in the Asset Purchase Facility (APF), and to design a programme of sales to be completed no earlier than towards the end of 2023 which should fully unwind the stock of corporate bond holdings.

The Bank commenced its sales programme in September 2022, and the stock of corporate bond holdings has reduced by over 65% from the initial purchase proceeds of £20.0bn. For full details of the Bank’s sale programme, please see the 18 August 2022 Market Notice.  

As the size of the portfolio and the number of individual bonds held has reduced materially, the Bank is making some operational changes to support the efficiency and effectiveness of its auctions. Effective from the week beginning 24 April 2023, the Bank will offer each eligible bond for sale each week, on Tuesdays and Wednesdays, rather than each fortnight. In addition, the Bank will now also stand ready to conduct buybacks of bonds from all issuers on a weekly basis every Thursday. Further details of these changes are set out below.

Other operational terms as set out in the Market Notice published on 18 August 2022 will remain unchanged, unless explicitly referenced in this supplementary Market Notice. The Bank will continue to keep all aspects of its sales approach under review and reserves the right to modify the structure of its sales operations, at its sole discretion, throughout the life of the sales programme.

Changes to auctions and buyback execution windows

From the week beginning 24 April 2023, each bond that remains in the Bank’s portfolio will be auctioned on a weekly basis rather than fortnightly. Each auction will continue to be structured around bonds held within specific sectors, with bonds offered on the following schedule each week:

• Tuesday – bonds from all issuers in the Electricity, Gas, Energy and Water sectors; and
• Wednesday – bonds from all issuers in the Communications, Consumer Cyclical, Consumer Non-Cyclical, Industrial & Transport and Property & Finance sectors.

The schedule of operations effective from the week beginning 24 April 2023 is outlined below and will be available on the Bank’s website. Effective from the same point, the Bank will now stand ready to conduct buybacks of bonds from all issuers on a weekly basis, during execution windows every Thursday. This includes those bonds that mature on or before 5 April 2024, which are not offered via auction.

The operational process for buybacks, including submissions of initial expressions of interest, followed by a formal buyback offer, remain as set out in the 18 August 2022 Market Notice. Issuers should continue to submit a Buyback Request form via their intermediary bank to CBPSissuerbuybacks@bankofengland.co.uk no later than five London business days before the requested execution date. Bonds will not be excluded from auctions while a buyback request is being considered, so holdings may be subject to change. 

As the unwind of the portfolio enters its final stages the Bank is also now actively exploring additional methods of sale to be used alongside auctions to conclude the disposal of corporate bond holdings. This is likely to include seeking further interest in buybacks and undertaking bilateral transactions where needed.

Corporate bond operational schedule – effective w/c 24 April 2023