(Bloomberg) -- The Bank of England has completed its planned sales of corporate bonds originally bought as part of a program to stabilize markets in the wake of the Brexit vote and the emergence of the Covid-19 pandemic.
The remaining £833 million of the initial £20 billion corporate bond portfolio is expected to be held to maturity, though the BOE said in a statement that it would “consider participation in any open market tender offers on a case-by-case basis.”
The facility formed part of a wider quantitative easing effort that’s expected to cost the UK taxpayer at least £100 billion ($124 billion), threatening to become a massive drain on the government’s resources amid a cost of living crisis.
Tuesday’s announcement means the central bank has now reduced the size of its corporate bond holdings by more than 95% since it commenced offloading the assets in September. It comes months ahead of the original deadline it set itself of “towards the end of 2023.”
The sales program coincided with the lowest supply of sterling high-grade corporate bonds since 2015 last year.
Issuance of pound debt is running at an even slower pace in 2023, meaning the disposals offered liquidity to portfolio managers like Nicolas Trindade at AXA Investment Managers, who had been buying some of the bonds that the central bank was disposing of.
“At the end of the day, it was really helpful. I had inflows that I managed to put to work through the Bank of England,” said Trindade.
The BOE was due to auction off a little over £100 million of corporate notes on Tuesday. The remaining bonds are all due to mature by April next year.
The program ran into controversy for supporting fossil fuel companies that campaigners claimed put it at odds with the government’s environmental objectives.
The BOE still holds about £811 billion of gilts, around £80 billion of which are being run off or sold each year.
(Updates with investor comment from sixth paragraph.)
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