BOC To Buy More T-Bills, Provincial, Corporate Bonds -TEXT

     (MNI) - The following are three announcements by the Bank of Canada on

Wednesday to buy provincial bonds, corporate bonds and ramp up its treasury bill

purchases.

Bank of Canada to Introduce a Provincial Bond Purchase Program

     The Bank of Canada today announced its intention to introduce a Provincial

Bond Purchase Program (PBPP) to further support the liquidity and efficiency of

provincial government funding markets.

     This program will supplement the already-implemented Provincial Money

Market Purchase Program. The aim of both these programs is to maintain

well-functioning provincial funding markets in the face of significant demands

for funding as governments implement their emergency measures, and businesses

and households seek to bridge this difficult period.

     The PBPP will purchase eligible securities in the secondary market.

Eligible securities are made up of Canadian-dollar denominated bonds issued by

all provinces and fully-guaranteed provincial agencies with remaining

terms-to-maturity up to ten years. The program size will be capped at $50

billion. The program will remain active for a period of 12 months. The program's

parameters may be expanded if conditions warrant.

     The Bank will conduct a targeted competitive process to select an asset

manager to run this program. As previously announced, the Bank has retained

BlackRock Financial Markets Advisory to provide advisory services and CIBC

Mellon to serve as custodian.

     The PBPP is expected to be operational in early May. The specific launch

date and further operational details are expected to be announced by the end of

April.

     The Bank of Canada continues to closely monitor global and domestic market

developments and remains committed to providing all the liquidity the financial

system needs so that it can continue to serve Canadians.

Bank of Canada to Introduce a Corporate Bond Purchase Program

     In order to support the efficient and continuous functioning of financial

markets, the Bank of Canada is announcing its intention to introduce a Corporate

Bond Purchase Program (CBPP).

     This program will support the liquidity and proper functioning of the

corporate debt market. A liquid and efficient market for Canadian-dollar

corporate bonds allows companies, currently challenged by the impact of the

COVID-19 pandemic, to continue to obtain necessary longer-dated financing to

support their operations, ultimately aiding the Canadian economy. It also

strengthens the pass-through of monetary policy actions to borrowers.

     To support the flow of credit for corporate issuers in Canada, the CBPP

will purchase eligible corporate bonds in the secondary market. The program size

will be capped at $10 billion and will be restricted to senior secured and

unsecured bonds originated by Canadian incorporated companies with a remaining

maturity of up to 5 years and a minimum credit rating of BBB or equivalent. Debt

issued by deposit-taking institutions will be excluded given their access to

other support facilities by the Bank of Canada. The program will remain active

for a period of 12 months. The program's parameters may be expanded if

conditions warrant.

     The Bank will conduct a targeted competitive process to select an asset

manager to run this program. As previously announced, the Bank has retained

BlackRock Financial Markets Advisory to provide advisory services and CIBC

Mellon to serve as custodian.

     The CBPP is expected to be operational in early May. The specific launch

date and further operational details of the program are expected to be announced

by the end of April.

     The Bank of Canada continues to closely monitor global and domestic market

developments and remains committed to providing all the liquidity the financial

system needs so that it can continue to serve Canadians.

Bank of Canada announces increase in the amount of Government of Canada treasury

bills it acquires at auction

     The Bank of Canada announced today that, to support continued liquidity and

efficient functioning of the federal government's treasury bill program, it is

temporarily increasing the amount of treasury bills it acquires at auctions to

up to 40 per cent, effective immediately.

     Prior to this change, purchases at treasury bill auctions were generally

limited to a maximum of 25 per cent.

     The 40 percent limit will be in effect until further notice, although the

Bank may adjust it in either direction as market conditions warrant.

     The Bank continues to monitor market developments closely and remains

committed to supporting the liquidity and efficient functioning of Government of

Canada funding markets.

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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