Skip to content

Fed Plans to Sell $13.7 Billion of Corporate Bonds, ETFs by Year-End

  • by


Federal Reserve Chairman Jerome Powell


joshua roberts/Reuters

The Federal Reserve will soon begin selling off the corporate bonds and exchange-traded funds it amassed last year through an emergency-lending vehicle set up to contain the Covid-19 pandemic’s economic fallout.

The vehicle, known as the Secondary Market Corporate Credit Facility, or SMCCF, held $5.21 billion of bonds from companies including

Whirlpool Corp.


Walmart Inc.


Visa Inc.

as of April 30. In addition, it held $8.56 billion of exchange-traded funds that hold corporate debt, such as the Vanguard Short-Term Corporate Bond ETF.

A Fed official said the sales should be completed by the end of this year. Net proceeds will be remitted to the Treasury Department.

The Fed’s corporate-debt holdings are distinct from its $7.3 trillion balance sheet of Treasury securities and agency mortgage-backed securities. The central bank is continuing to purchase those types of assets to the tune of at least $120 billion a month as part of its monetary-policy goal of holding down borrowing costs until the economy recovers further from the pandemic.

The Fed added that its corporate-bond and ETF sales “will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions” for ETFs and corporate bonds.

Write to Paul Kiernan at

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


Source link

Leave a Reply

Your email address will not be published.