MNI EXCLUSIVE: BOC to Provide More Transparency on Debt Buys

By Greg Quinn

     OTTAWA (MNI) - The Bank of Canada next week will lay out more detailed

public disclosure plans about asset purchases, as it makes an unprecedented

foray into provincial and corporate bonds to ease the coronavirus pandemic. 

     "Next week the Bank will be outlining further measures to increase

transparency and reporting of its asset purchase programs," spokesperson Louise

Egan said Thursday in an email. She didn't provide more specific details. 

     The central bank has said it would buy up to CAD50 billion of provincial

government bonds over 12 months starting May 7 and up to CAD10 billion of

corporate bonds. Its balance sheet has already tripled to CAD392 billion on

purchases of federal government bonds, t-bills, and resale agreements.

     While aggregate holdings of provincial bonds will be reported each Friday

on the BOC's balance sheet, the terms of the provincial facility had said "the

names of individual issuers and securities purchased will not be published." The

Bank has also not disclosed some credit ratings information around its

purchases. 

     --PURCHASE GUIDELINES

     The BOC said its provincial bond purchases have "no minimum rating

requirement" but "meet the criterion of sufficiently high quality as determined

by the Bank." 

     Senior Deputy Governor Carolyn Wilkins told reporters earlier Thursday the

program is set up to buy bonds from each province and all of them have

investment grade ratings.

     Program managers will scale the purchases relative to the size of each

provincial economy and their governments' share of the debt market, Wilkins

said.

     "That just means that we've sized it right to make sure that in each one of

these provincial markets, we are doing enough to improve market functioning,

which is in fact what we are seeing," she said.

     The rate of balance sheet growth is already much faster than the global

financial crisis a decade ago. Wilkins and Governor Stephen Poloz said earlier

Thursday such moves are essential to stabilizing markets and ensuring the

economic restart as Covid-19 is brought under control. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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