Asset Purchase Facility: Gilt Purchases – Market Notice 5 August 2021

At its meeting ending on 4 August 2021, the MPC voted for the Bank of England to continue with its existing programme of UK government bond purchases, financed by the issuance of central bank reserves, maintaining the target for the stock of these purchases at £875 billion.footnote [1]

The existing programme of £150 billion of UK government bond purchases had started in January and its completion was expected by around the end of 2021.

Asset Purchase Facility: Gilt Purchases

1. This market notice sets out details of the Bank’s planned APF gilt purchases taking place from the week commencing 9 August 2021 until the week commencing 13 December 2021. It covers the completion of the £150bn of gilt purchases announced in November 2020footnote [2], and the reinvestment of proceeds of a gilt maturity occurring on 7 September 2021.

2. The Bank intends to purchase evenly across the three gilt maturity sectors. For operations scheduled between 9 August 2021 and 15 December 2021 the planned size of auctions will be £1.147bn for each maturity sector. This auction size includes the reinvestment of the £16.58bn cash flows associated with the maturity on 7 September 2021 of a gilt owned by the APF.

3. 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.

4. The Bank will confirm details of the following week’s operations each Thursday at 16:00 (London time). The Bank will not hold a gilt purchase operation on Monday 30 August 2021 due to the UK bank holiday. This operation – for short maturity bonds – will instead be held on Thursday 2 September 2021. In line with previous years, the Bank will not hold an APF gilt operation on the same day as the Chancellor’s Autumn Statement or Budget (date to be confirmed). A replacement auction date will be announced in due course.

5. As usual, the size of auctions will be kept under review throughout the purchase programme in light of market conditions.

6. The range of gilts eligible for purchase will remain unchanged from previous operations. 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.

7. Other than as amended by this Market Notice, previous Market Notices relating to the Bank’s gilt purchases under the APF will apply.footnote [3]


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