The great bond buyback

The Bank of England has kicked off its repurchase scheme for sterling high grade bonds, but opinion is divided over whether the subsequent tightening of spreads is down to the government initiative or extraneous factors. Laurence Neville reports

The Bank of England's purchase of investment grade sterling corporate bonds started on March 25, almost two months after the announcement of the plan - an element of the Asset Purchase Facility (APF) and part of the Bank's broader quantitative easing strategy to stimulate the economy - and a few weeks after the first successful reverse auction for government bonds.

Even before the Bank took the first corporate bonds onto its books, the market reacted positively, with spreads moving significantly