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Federal Reserve Expands Support to Corporate Bond Markets Again

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On June 15, the Federal Reserve (Fed) updated and expanded the Secondary Market Corporate Credit Facility (SMCCF), one of the Fed’s corporate bond-buying programs, to support market liquidity and the availability of credit for large employers. The recent change allows the facility to buy U.S. corporate bond portfolios that track a broad market index.

Bonds eligible for the Broad Market Index must:

  • have remaining maturity of up to 5 years 
  • be issued in the U.S. or under the laws of the U.S
  • meet the same rating requirements for eligible individual corporate bonds under the SMCCF
  • not be issued by an insured depository institution, depository institution holding company, or subsidiary of a depository institution holding company, as defined in the Dodd-Frank Act.

Ratings are subject to review by the Fed.  This expansion will complement the Fed’s purchases of exchange-traded funds. As of May 19, the Fed’s total outstanding amount of loans under the SMCCF was $1.29 billion. For more information about the SMCCF and the Primary Market Corporate Credit Facility, see the previous YPFS blog post.