Fed Plans to Sell $13.7 Billion of Corporate Bonds, ETFs by Year-End
June 02 2021 - 5:08PM
Dow Jones News
By Paul Kiernan
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. and 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 paul.kiernan@wsj.com
(END) Dow Jones Newswires
June 02, 2021 16:55 ET (20:55 GMT)
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