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APF sales schedule for Q1-23 due to be announced at 18:00GMT

BOE
  • The BOE is due to announce its Q1-23 sales plan at 18:00GMT. This is no longer an MPC decision, but a decision taken purely by the Bank Executive / Markets team. We think that there are three options available to the Bank for Q1 sales:
  1. Equally weighted buckets (in cash proceeds terms) between short / medium / long-dated gilts (the original plan)
  2. Buckets weighted 40:40:20 for short/medium/longs
  3. 50:50 weighting with only shorts/mediums on offer (in line with Q4-23)
  • We don’t have a strong conviction on the outcome . Gilt market liquidity is still lower than earlier in the year, in our view, and we had previously thought that with the sales of the Financial Stability Portfolio ongoing through Q1, it would be preferable for the Bank to opt for option 1 or 2 above.
  • However, after the large sales seen in Wednesday's operation, around 59% of the Bank's nominal long-dated gilt holdings have already been sold back to the market in less than 3 weeks' of operations. It therefore looks like the cast majority of the Financial Stability Portfolio "temporary" holdings could be largely back in the market's hands much sooner than originally expected.
  • In terms of the size of the operation, we would expect a total of around GBP10-12bln of active APF sales in Q1-23.
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