Bank of England to start selling long bonds next quarter

On Friday, the Bank of England (BoE) announced its intention to sell bonds (short-, medium- and long-term) starting from January 9. This measure will be part of the quantitative tightening program. Five auctions are planned for every announced bond’s type. Each of the auctions is estimated at 650 million pounds, this amounts to 9.75 billion pounds.

After a sharp fall of long-term bonds in late September, the BoE refused to include them in its sales program for the current quarter. Pension funds, known for their commitment to long and index-linked bonds, found themselves in a difficult position. They faced with a series of calls that left the BoE with no choice but to buy both types of bonds to prevent them from selling out.