Annual £20 billion sales to reduce APF gilt holdings to zero
UK government bond holdings in the Asset Purchase Facility will be reduced to zero through annual sales of £20 billion alongside maturing debt. The Bank of England agreed on the multi-year framework at its September 16 policy meeting.
Three buckets for the £488 billion portfolio
Under the multi-year plan, the total £488.2 billion Asset Purchase Facility (APF) portfolio is split into three tranches.
The Bank Executive will hold £221.7 billion of gilts maturing before 2035 to maturity.
A further £120.0 billion of the longest-dated gilts, including part of the 1.75% 2049 gilt and all debt maturing thereafter, will remain in the APF to indirectly back banknote issuance.
The remaining £146.5 billion in gilts maturing between 2035 and 2049 will be sold at an annual pace of £20 billion.
The Bank has paused regular APF gilt auctions while engaging with HM Treasury and the Debt Management Office (DMO) to explore direct sales to the government at market prices.
Direct sales model shifts unwind to Treasury
The proposed transfer mechanism enables HM Treasury to instruct the DMO to buy APF holdings directly at market prices, concluding active sales around 2034.
A formal progress review before April 2027 will determine whether this route is incorporated into the government's official financing remit.
Regardless of the chosen sales channel, the full APF portfolio will continue to be accessible to the DMO through the existing gilt lending facility.
Quiet transfer replaces market friction
Offloading APF gilts directly to the Debt Management Office eliminates private auction friction.
However, shifting debt between state balance sheets reshuffles sovereign liabilities without truly removing fiscal exposure.
Pausing open auctions nonetheless provides welcome predictability for the gilt market through 2027.