The Bank of Canada announced it will decrease the frequency of its provincial bond purchases, noting that credit markets are no longer in dire need of the program’s support which was first unveiled in May 2020 in response to the Covid-19 pandemic.
In an emailed response to Bloomberg, a representative for the Bank of Canada revealed the central bank will now only conduct one reverse auction per week instead of two. “Provincial markets are functioning well and as a result tenders are being reduced to only one a week,” said Rebecca Spence, the bank’s spokesperson. “This is consistent with the gradual reduction approach for other programs that were introduced by the Bank to support market functioning as these markets improved,” she continued.
Back in May, the central bank announced that it would start purchasing up to $50 billion in provincial bonds in an effort to increase liquidity levels in Canada’s financial markets. As of the week ending on February 19, the Bank of Canada held over $17.4 billion in provincial bonds. The program is slated for expiry in May 2021.
Information for this briefing was found via the Bank of Canada and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.