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)
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