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Thread: FED reveals bond purchases of AT&T,Walmart, United Health

  1. #1

    FED reveals bond purchases of AT&T,Walmart, United Health

    (Bloomberg) -- The Federal Reserve bought bonds issued by companies including AT&T Inc., UnitedHealth Group Inc. and Walmart Inc. as part of its emergency lending program set up in response to the pandemic, according to new disclosures.

    On June 16, the U.S. central bank began purchasing securities of individual issuers as part of a broad index it created to include companies that were eligible for the program.

    The disclosures, posted Sunday, showed that of the $207 million of purchases made on the first day of buying, about 21% were of debt issued by firms in the consumer non-cyclical sector, while 15% were of consumer cyclical debt and 10% were of technology debt. Issues rated below investment grade comprised 3.6% of the securities acquired.

    In a separate disclosure, the New York Fed released the composition of the broad index the central bank is using to conduct the purchases. Fed officials have said the goal of the buying is to maintain liquidity in the market for corporate debt, so that issuers are able to access capital despite the deep economic downturn created by the pandemic. The index is comprised of almost 800 issuers.

    In mid-May, the Fed began buying exchange-traded funds invested in corporate debt as it readied for outright purchases. As of Tuesday, the Fed had amassed $8.71 billion of assets including ETFs and individual securities through the program, known as the Secondary Market Corporate Credit Facility.

    “Buying cash bonds is going to form the primary mode of support over time by which we support market function,” Powell said during the hearing. “Over time, we will gradually move away from ETFs.”
    When life itself seems lunatic, who knows where madness lies? - Miguel de Cervantes, (Don Quixote)

    Quote Originally Posted by Voluntarist View Post
    The tree of liberty must be refreshed from time to time with the Federal Reserve Notes of patriotic central banks

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  3. #2
    Fed buys Berkshire Energy bonds, Berkshire then buys Dominion Energy. Money printer goes brrrrrrrr. I guess we're about to watch the Fed create money, then hand it directly to mega-corps so they can use that new money to buy up everything not nailed down.

    It's ridiculous how blatantly the Fed is violating 13(3). As if Berkshire, among the rest, couldn't receive bond funding from other sources
    Last edited by devil21; 07-06-2020 at 11:28 AM.
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  4. #3
    I don't support this program at all, but I would point out that they are purchasing ETFs and indexes, and the amount of money going to individual companies is very small. That may change at any time though...

    This is price fixing. They buy corporate bonds to ensure that interest rates paid on those bonds does not increase. This is part of keeping the interest rates on government debt instruments extremely low, below any competitive market rate. If there was an actual free and competitive market in debt instruments, the interest paid would be far higher right now.
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