Corporate Bond Purchase Scheme (CBPS) - Bank of England

 

On 4 August 2016, the Bank of England announced a programme of corporate bond purchases, financed by central bank reserves, via the Asset Purchase Facility (APF).

The purpose of the Corporate Bond Purchase Scheme (CBPS) is to impart monetary stimulus by lowering the yields on corporate bonds, thereby reducing the cost of borrowing for companies; by triggering portfolio rebalancing into riskier assets by sellers of assets; and by stimulating new issuance of corporate bonds.

The Bank will look to purchase, via the CBPS, a portfolio of up to £10 billion of sterling corporate bonds representative of issuance by firms making a material contribution to the UK economy, in order to impart broad economic stimulus.

The Scheme will start to undertake purchases from 27 September 2016 and will operate for an initial period of 18 months.

Eligibility Criteria

  • Bonds issued by companies (including their finance subsidiaries) that "make a material contribution to economic activity in the UK".
  • Conventional senior secured or unsecured debt.
  • "Spens clause" normally eligible.
  • Rated investment grade by at least one major rating agency and subject to the BoE assessment process.
  • Cleared and settled through Euroclear and/or Clearstream.
  • Minimum amount £100m in issue.
  • Minimum residual maturity of 12 months.
  • Minimum 1 month since issuance.
  • Admitted to official listing on an EU stock exchange.