Asset Purchase Facility: Gilt Purchases – Market Notice 18 March 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 22 March 2021 up to and including the week commencing 3 May 2021 – which is the week of the MPC’s May meeting. It covers the ongoing £150bn gilt purchases announced in November 2020 and the completion of the reinvestment of proceeds of a gilt maturity from 22 January 2021 as set out in the December 2020 market notice.

The Bank intends to purchase evenly across the three gilt maturity sectors. For operations scheduled between 22 March 2021 and 6 May 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.

The Bank will not hold gilt purchase operations on Monday 5 April 2021 and Monday 3 May 2021 due to UK bank holidays. These operations – for short maturity bonds – will instead be held on Thursday 8 April and Thursday 6 May 2021.

A further Market Notice will be published alongside the May MPC minutes explaining the operational approach to gilt purchases for the subsequent maintenance period (i.e. until the MPC’s June meeting).

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.

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