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Banking & Finance

Lease-backed securities spurned by QE programme

Article Date:  Oct 16 2009

None of the £175 billion created by the government’s quantitative easing (QE) programme has been used to buy lease-backed securities, claims finance provider Syscap.

Syscap’s analysis of the Bank of England’s asset purchase statistics suggests that as of 8 October, £160.2 billion has been used to buy gilts, £1.3 billion spent on corporate bonds and £723 million on other commercial paper.

Philip White, chief executive of Syscap, says that if the Bank of England started buying up leases held by investors, it would free those investors to fund new leases elsewhere, as well as bringing down the average cost of leasing and easing businesses' cash flow.

Adds White, ‘What is the point of the Bank of England announcing it is extending QE to lease-backed securities and then not buying them?’

The Bank of England determined to buy commercial paper backed by equipment leases with a maximum maturity of nine months, while the average equipment lease length is over three years, according to Syscap.

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