Traders say BoE green bond purchase scheme could sap liquidity
Updated plan could spike market volatility – harming not only brown bonds, say dealers
The Bank of England is updating its £20 billion ($28 billion) corporate bond purchase scheme to take better account of the green credentials of companies in which it holds bonds. But traders warn that the move could mean illiquidity and higher spreads for bonds issued by companies that don’t have environmental, social and governance (ESG) chops. And this may not be the only conundrum the change has introduced.
“Will bonds from green companies start to see more demand, liquidity, and tighter
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