Bank of England’s corporate bond holdings hit £6.1bn

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The Bank of England now holds £6.1bn of corporate bonds, up from £5.76bn last week, as its bond buying programme continues to run ahead of its expected pace.

The central bank started buying corporate bonds in September as part of a plan to cushion the economy from any post-Brexit weakness, reports Thomas Hale in London.

It said it would buy £10bn of bonds over an 18 month period, from UK companies or overseas businesses with significant operations in the UK, but surpassed the halfway point after just 5 months.

Last week, Chris Salmon, the central bank’s executive director for markets, said it was “probable” that the bank “will be able to complete the purchase program faster than we thought possible”.

Today, the Bank kept rates unchanged and declined to alter its gilt or corporate bond purchase plans.

The sterling corporate bond market has declined significantly over recent years, and is now dwarfed by its euro equivalent.

“The market’s well aware that they’re going to finish the program early, and in our minds it’s probably one less positive thing for the sterling corporate bond market,” said Andreas Michalitsianos, a portfolio manager at JP Morgan Asset Management.

He added the program has created new opportunities, particular for bonds that are not being bought, such as sterling bonds issued by banks.

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