The Corporate Bond Purchase Program (CBPP) supports the liquidity and proper functioning of the corporate debt market, by purchasing bonds through a tender process in the secondary market. A liquid and efficient market for Canadian-dollar corporate bonds allows companies, currently challenged by the impact of the COVID-19 pandemic, to continue to obtain necessary longer-dated financing to support their operations, ultimately aiding the Canadian economy. It also strengthens the pass-through of monetary policy actions to borrowers.
Corporate bond purchases will be conducted by TD Asset Management (TDAM) on behalf of the Bank of Canada.
Terms and conditions
See the full terms and conditions for this program.
To support the flow of credit for corporate issuers in Canada, the CBPP will purchase eligible corporate bonds in the secondary market. Program purchases will be executed through a tender offer process.
- The program will hold up to a total of $10 billion par value of eligible assets.
- The Bank’s purchases will aim to reflect a reference portfolio based on sectoral shares of eligible assets outstanding. Actual holdings will depend on market conditions and what bonds are offered to the Bank through the tender offer process. As a result, the Bank’s holdings will likely differ from the reference portfolio.
- The program and its operations may be amended at any time if conditions warrant.
Eligible dealers wanting to participate in the program must contact to register.
The program will begin on May 26, 2020 and operate for 12 months from May 26, 2020 to May 25, 2021.
Eligible issuers are companies incorporated in Canada, excluding deposit taking institutions.
CAD-denominated senior secured or senior unsecured corporate bonds issued by eligible issuers and included in the FTSE Canada 0+ Year Universe Bond Index Series.
- Eligible assets for purchase will have at least one rating of BBB Mid/BBB/Baa2 or higher for the senior unsecured rating or long-term foreign issuer credit rating assigned by any of DBRS Morningstar, Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings, as of April 15, 2020.
- Eligible assets that are subsequently downgraded after April 15, 2020 and no longer retain at least one rating of BBB Mid/BBB/Baa2 or higher will continue to be eligible for the program provided they retain at least one rating of BBB Low/BBB-/Baa3 or higher.
- If an issuer fails to maintain at least one rating of BBB Low/BBB-/Baa3 or higher, it will no longer be eligible for purchase into the program.
- Eligible assets purchased in the secondary market will have a remaining term to maturity of 5 years or less at the time of purchase. Floating rate notes and sinking fund bonds will be excluded from eligibility.
In all cases eligibility may be subject to the Bank's discretion.
On an issuer basis, the Bank will not hold more than 10% of the par value of eligible assets outstanding on April 15, 2020.
The Bank will purchase eligible assets that satisfy the Bank’s pricing and portfolio requirements and objectives. The Bank reserves the right to adjust its pricing and portfolio requirements and objectives to meet policy objectives.
Details for the next operation—including the purchase amount and number of eligible securities—will be provided in this table on the morning of the auction.
|Reverse auction date||Settlement date||Number of securities eligible||Maximum par amount to be purchased ($M)|
The results of the operation will be updated after 16:00 (ET) on each day the program is active.
|Reverse auction date||Settlement date||Number of securities purchased||Number of securities eligible||Par amount purchased ($M)||Maximum par amount to be purchased ($M)|
The bonds purchased through this program will aim to reflect a reference portfolio based on sectoral shares of eligible assets outstanding. Actual holdings will depend on market conditions and what bonds are offered to the Bank through the tender offer process. As a result, the Bank’s holdings will likely differ from the reference portfolio.
|Sector||Share of reference portfolio (% as of 2020-06-30)||Share of actual total holdings (% as of 2020-05-29)||Par value of actual total holdings ($M as of 2020-05-29)|
The Bank will update this table every month with a one-month lag. The aggregate market value of holdings of corporate bonds acquired through this program will be updated every Friday on the Bank’s weekly balance sheet.
The names of individual issuers and securities purchased will not be published in order to protect commercially sensitive information and avoid adversely impacting the fair market value of the Bank’s purchases.
Head of Fixed Income
TD Asset Management
Financial Markets Department
Bank of Canada