Asset Purchase Facility: Gilt Sales – Market Notice 23 June 2023

The Bank of England (BoE) has published a new market notice to announce its plan to sell a total of £7.11 billion worth of gilts during the third quarter (Q3) of the year. The sales will be evenly divided across gilts within the short-term (3-7 years remaining maturity), medium-term (8-20 years remaining maturity, and long-term (beyond 20 years remaining maturity) maturity buckets with £2.37 billion each and will be conducted through a series of monthly auctions. The auctions will begin on July 3rd for short maturity gilts, followed by medium maturity gilts on July 17th, and long maturity gilts on July 24th (please see the table at the end of the event for the auction schedule).
The Bank’s decision to sell gilts is in line with its commitment, established during the September 2022 Monetary Policy Committee (MPC) meeting, to reduce the amount of purchased gilts held in the Asset Purchase Facility (APF) by £80 billion over the course of the next twelve months. In order to meet this target, the Bank has determined that sales of £7.11 billion during Q3 will be necessary, based on the current market value of the APF gilt holdings.
It may be worth noting that adjustments to the sales program may be made if there are significant fluctuations in gilt market prices. In such cases, the Bank’s preference would be to modify the size of the final three auctions while ensuring equal sales amounts across the three maturity sectors. The Bank will provide advance notice to the market if any adjustments are necessary. Furthermore, the BoE emphasizes that it reserves the right to make changes to its schedule, including the gilts to be sold, auction sizes, or any other aspect, at its sole discretion.
—
Table 1 – Auction Schedule