… corporate bonds from a rather unusual seller: the Bank of England.
Yes, on Friday the BoE will begin selling some of the corporate bonds it started buying back in January 2009, as part of its programme to inject liquidity into the financial system.
Here’s Evolution Securities Gary Jenkins with the details of today’s sale:
The Bank announced a change to its Corporate Bond Asset Purchase Facility on 22nd December, extending the scheme to allow for sales of securities as well as purchases, with the first asset sale taking place today [Friday]. The extension of the Corporate Bond APF should improve liquidity in the secondary bond market and it provides a potential exit strategy for the Bank with minimal market disruptions. Today the Bank is offering to sell up to a maximum of £322.9m across 140 issues. It is offering bonds in which it has a holding in excess of £1m. All eligible bonds will be available for sale each week, and the Bank will be ready to sell between £1m and £5m of eligible securities in each operation, it will privately set a maximum spread level at which it is willing to deal and accept bids below this level on a uniform spread basis. Bids have to be entered between 11:00 and 11:30 and we should have the result of the auction at 11:45 or soon thereafter.
And if you’re curious as just what kind of stuff is on offer, here’s a handy spreadsheet, also from Jenkins, showing all of the bonds offered for sale, Evolution’s current spread indication for the bonds, and both the weighted average spread level and the latest spread level the BoE purchased them at.
Update: It looks like the BoE ended up selling £86m of corporate bonds (full list of bonds sold available here). Based on the Evolution spreads that works out to a profit of about £60m. Nice one BoE.
Bank of England to sell up to £323m of company bonds – Bloomberg
Bank of England to buy up corporate bonds – FT