Bank of England to buy up commercial paper

The Bank of England yesterday announced its intention to buy asset-backed commercial paper from struggling UK companies in a continuing effort to increase the flow of credit, starting on Monday August 3.

The secured commercial paper facility aims to channel funds to a broad range of corporates while enlarging the private issuance market and removing obstacles to corporate access to capital markets.

The initiative will be funded by advances from the Debt Management Office and the issuance of central bank reserves, when authorised by the monetary policy committee (MPC).

The bank has specified that no underlying asset should have an expected final maturity of more than 18 months, the weighted average life of all the assets purchased should not be more than nine months, and only sterling-denominated securities will be purchased.

According to weekly data published by the US Federal Reserve, the total amount of commercial paper outstanding in the US is contracting at the fastest rate on record, registering a 28% decline year-on-year.

The UK's programme is an extension of the Bank of England's existing asset purchase facility, or ‘quantitative easing', which began in March and has purchased more than £112 billion of government bonds, with a total of £125 billion available. The scale of the asset purchase facility is set to be reviewed at the MPC meeting next week, August 5–6.

Full details of the programme can be found here:

See also: UK quantitative easing hits pensions
Central banks continue to expand support in face of deflation threat
Bank of England reveals £75 billion asset purchase programme

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

The future of life insurance

As the world constantly evolves and changes, so too does the life insurance industry, which is preparing for a multitude of challenges, particularly in three areas: interest rates, regulatory mandates and technology (software, underwriting tools and…

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here