The Provincial Bond Purchase Program (PBPP) aims to support the liquidity and efficiency of provincial government funding markets, by purchasing bonds through a tender process in the secondary market. It supplements the Provincial Money Market Purchase Program (PMMP). The asset manager for this program is BMO Global Asset Management. The amount of debt purchased for any given eligible issuer will factor in the share of the issuer’s debt outstanding as well as the issuer’s share of Canada’s GDP.
Purchases will be executed through a tender offer process. Authorized dealers will be provided advance notice before a tender date as to the eligible assets for tender. Dealers will communicate offers to sell notional amounts of eligible assets at a specified price to BMO GAM, at times determined by BMO GAM.
- There is no minimum rating requirement.
- The Bank will not purchase more than 20% of an issuer’s eligible assets outstanding.
- The Bank’s purchases will aim to reflect a reference portfolio based in equal weight on each province or territory’s share of eligible bonds outstanding and their share of Canadian GDP. Each issuer’s eligible share will be recalculated on a monthly basis. Actual purchases will depend on what is offered through the tender offer process and may differ from the reference portfolio.
- The program will hold up to a total of $50 billion par value of eligible assets.
- The program and its operations may be amended at any time if conditions warrant.
The program will begin on May 7, 2020 and operate for 12 months from May 7, 2020 to May 6, 2021.
CAD-denominated bonds maturing on or before April 15, 2031 issued by or guaranteed by a provincial or territorial government that meet the criterion of sufficiently high quality as determined by the Bank.
A list containing eligibility information and decisions to impose additional risk mitigants for provinces whose securities are either directly issued or guaranteed is available on the Bank’s website. The program will purchase the eligible assets in the secondary market.
Non-guaranteed agency bonds, municipal bonds, real return bonds, floating rate notes, strip/residuals, T-Bills, and promissory notes issued by provinces or territories are ineligible for purchase in the program.
Eligible issuers are all Canadian provinces and territories and provincial and territorial guaranteed agencies.
As purchases will be executed through a tender offer process, pricing will depend on market conditions. The Bank reserves the right to adjust its pricing and portfolio requirements and objectives to meet policy objectives.
Details for the next operation—including the purchase amount and eligible maturity range—will be provided in this table. The target amount to be purchased will be updated on the morning of the auction.
|Reverse auction date||Settlement date||Eligible maturity range (years)||Number of securities eligible||Maximum par amount to be purchased ($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||Eligible maturity range (years)||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 which provides equal weight to each province or territory’s share of eligible bonds outstanding and their share of Canadian GDP, while maintaining a cap of 20% of an issuer’s eligible bonds outstanding, and total portfolio purchases of no more than $50 billion.
|Province/Territory||Share of reference portfolio (% as of 2020-07-31)||Share of actual total holdings (% as of 2020-06-30)||Par value of actual total holdings ($M as of 2020-06-30)|
|Newfoundland and Labrador||1.78||2.13||97.2|
|Prince Edward Island||0.19||0.11||5.0|
- 1. Yukon does not have any bonds in the 0-10 year sector. [←]
The Bank will update this table, including each province and territory’s share of the reference portfolio, every month with a one-month lag. The aggregate market value of the holdings of provincial bonds acquired through the PBPP program will be updated every Friday on the Bank’s weekly balance sheet.