The Federal Reserve Bank of New York today announced that the Secondary Market Corporate Credit Facility (SMCCF) will begin buying corporate bonds on June 16. The New York Fed also released additional Frequently Asked Questions regarding the purchase strategy for these eligible assets.
As specified in the revised term sheet, the SMCCF will begin purchases of corporate bonds to create a portfolio that tracks a broad, diversified market index of U.S. corporate bonds. This index is made up of bonds trading in the secondary markets that have been issued by companies created or organized in the United States or under the laws of the United States that satisfy the criteria detailed in the revised term sheet. Issuers must have been rated investment grade as of March 22, 2020, and still be rated at least BB-/Ba3 on the date of purchase by the SMCCF. Issuers also cannot be an insured depository institution, depository institution holding company, or subsidiary of a depository institution holding company. Finally, the bonds must have a remaining maturity of no more than five years.
The SMCCF will begin purchasing bonds from Eligible Sellers on June 16. These purchases follow the start of purchases by the SMCCF of exchange-traded funds (ETFs) on May 12.
The Primary Market Corporate Credit Facility (PMCCF) is expected to become operational in the near future, as detailed previously.
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Compliments of the Federal Reserve Bank of New York.