Fed buys US$1.68bn for its corporate bond program

Credit: REUTERS/Leah Millis

By Richard Leong

NEW YORK, June 25 (IFR) - The Federal Reserve raised its holdings for its secondary corporate credit program by US$1.68bn in the week ended June 24 to US$8.71bn, according to Fed data released on Thursday.

As part of its Secondary Market Corporate Credit Facility, the central bank is now buying both individual corporate bond issues and credit exchange-traded funds.

The SMCCF was created by policy-makers in March to bolster lending in credit markets that were disrupted by the Covid-19 pandemic.

Since the Fed announced its plan to buy corporate bonds, this part of the fixed-income market has been on a tear, rebounding from its trough in March.

Renewed investor appetite for corporate debt has stoked a surge in investment-grade issuance that has topped US$1.18trn so far in 2020, according to IFR data.

"The corporate bond market is opened now to a variety of issuers due to the Fed's corporate purchase program," said Nicholas Elfner, co-head of research at Breckinridge Capital Advisors. "That's improved the tone in the corporate bond market."

(Additional reporting by David Bell; Editing by Paul Kilby)

((richard.leong@refinitiv.com; +1 646 223 6313;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.