Update: Bank’s CP purchases reach highest weekly total

Sale of commercial paper to the Bank of England’s Asset Purchase Facility reached their highest weekly total to date this week. For the week ending May 28, the fund bought £701m of sterling-denominated corporate CP, up from £394m the previous week. The most the facility had ever bought since its launch in mid-February before this was £561m in the week ending March 12. It is likely that a lot of the issuance is due to rolling maturities — the total held by the facility only climbed from £2.24bn to £2.29bn. The fund passed the three month mark the week before last and it dropped the three month maturity requirement in late April to allow CP with a maturity of one week to three months. Market participants believe that the fund has recently become less attractive as spreads in the buyers market have tightened. “There’s not been a huge amount of interest in the APF, and it’s not as attractive as it was,” said one London-based CP head. Of those that appear to have used the facility since its launch, few are low-rated issuers or issuers that didn’t already have a CP programme. “The problem is that it hasn’t really helped the people that it was intended to,” said the CP head. “A lot of it was supposed to help the A3/P3 names, but the problem is that to set up an ECP programme you need backup lines, and banks won’t give those out at the moment.” Nonetheless, dealers report that some issuers have recently been approved to use the fund.