LONDON (MNI) – The Bank of England saw the cover ratio at its
stg1 billion over 15 year reverse gilt auction Tuesday fall to just 1.81
from 2.38 in the corresponding auction last week.
This was the third lowest cover ratio in the current tranche of
quantitative easing. In the latest tranche of stg50 billion of QE the
average cover ratio for over 15 year auctions has been 2.36, with the
high of 2.89 on August 21 and the low of 1.55 on September 25.
The long end of the market has tended to see weak cover, with the
Sep 25 auction seeing the lowest cover of any maturity bucket.
In total, the BOE’s Monetary Policy Committee has sanctioned stg375
billion of asset buying under its QE scheme. As at the close of business
Thursday the BOE had made stg368.807 billion of purchases and, following
today’s auction, it has to complete only stg4.193 billion of purchases
to hit the target.
As the BOE is currently purchasing stg3 billion of gilts a week in
three weekly auctions, and all auctions have been fully covered, it will
have a little over stg3 billion of purchases to complete after the last
auction this week, on Wednesday.
This tranche of QE is set to come to an end in the October 31
auction, with no auctions in the week starting November 5 ahead of the
MPC’s November 7 and 8 policy meeting.
Under the BOE’s current programme gilts with a residual maturity of
3-7 years are being purchased on Mondays, over 15 years on Tuesdays and
7-15 years on Wednesdays.
-London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$$BE$]
