Bondholders seem set to reap the reward of the improved lendings flows caused by the scheme - as well as the presence of the Bank as a major buyer in the market.
The Bank of England's radical new quantitative easing programme will result in one big winner, according to one investment firm.
M&G said that returns from corporate bond funds are likely to increase, following the commencement of the £75 billion scheme. Quantitative easing sees the central bank buying up a mix of corporate and government bonds, in order to increase the money supply.
The programme, it is hoped, will improve lending flows to banks and make borrowing cheaper for businesses and consumers. Corporations, which issued the bonds the funds invest in, are therefore likely to benefit from the improved lending conditions.
In turn, this could lessen the rates of companies going into default - making the risk of bondholders losing their capital smaller.
Richard Woolnough, manager of the M&G Corporate Bond Fund, commented: "At this rate, the Old Lady of Threadneedle Street will become one of the biggest single investors in corporate bonds… This [buyer] owns a magic purse containing many billions of pounds, courtesy of her right to print money."
The programme was "obviously going to be beneficial" for corporate bond investors, Mr Woolnough added, citing the "increased liquidity" and the "presence of a keen buyer in volume" in the market. "Bonds of a higher quality from non-bank issuers are going to benefit the most."
