MNI POLICY: TEXT: Terms of BOC Provincial Bond Buying Program

By Greg Quinn

     OTTAWA (MNI) - Following is the text of the BOC's provincial bond purchase

program, published Thursday from Ottawa.

     The Provincial Bond Purchase Program (PBPP) aims to support the liquidity

and efficiency of provincial government funding markets. It supplements the

Provincial Money Market Purchase Program (PMMP). The asset manager for this

program is BMO Global Asset Management. The amount of debt purchased for any

given eligible issuer will factor in the share of the issuer's debt outstanding

as well as the issuer's share of Canada's GDP.

     Terms and conditions See the full terms and conditions for this program.

     Primary dealers for Government of Canada marketable bonds as listed on the

Bank of Canada website are eligible to participate in the PBPP. Eligible dealers

should contact BMO Global Asset Management (BMO GAM) to register.

     Operational details Purchases will be executed through a tender offer

process. Authorized dealers will be provided advance notice before a tender date

as to the eligible assets for tender. Dealers will communicate offers to sell

notional amounts of eligible assets at a specified price to BMO GAM, at times

determined by BMO GAM.

     There is no minimum rating requirement. The Bank will not purchase more

than 20% of an issuer's eligible assets outstanding. The eligible amount of an

issuer's assets outstanding will be recalculated on a monthly basis. The program

will hold up to a total of $50 billion par value of eligible assets. The program

and its operations may be amended at any time if conditions warrant. Duration

The program will begin on May 7, 2020 and operate for 12 months from May 7, 2020

to May 6, 2021.

     Eligible assets CAD-denominated bonds maturing on or before April 15, 2031

issued by or guaranteed by a provincial or territorial government that meet the

criterion of sufficiently high quality as determined by the Bank.

     A list containing eligibility information and decisions to impose

additional risk mitigants for provinces whose securities are either directly

issued or guaranteed is available on the Bank's website. The program will

purchase the eligible assets in the secondary market.

     Non-guaranteed agency bonds, municipal bonds, real return bonds, FRNs,

strip/residuals, T-Bills, and promissory notes issued by provinces or

territories are ineligible for purchase in the program.

     Eligible issuers Eligible issuers are all Canadian provinces and

territories and provincial and territorial guaranteed agencies.

     Pricing As purchases will be executed through a tender offer process,

pricing will depend on market conditions. The Bank reserves the right to adjust

its pricing and portfolio requirements and objectives to meet policy objectives.

     Reporting The Bank reports its aggregate holdings of provincial bonds

acquired through the PBPP program every Friday on the Bank's weekly balance

sheet.

     Due to confidentiality considerations, the names of individual issuers and

securities purchased will not be published.

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

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