Federal Reserve Board Discloses Plans to Wind Down Secondary Market Corporate Credit Facility Portfolio

Posted on 06/02/2021


The Federal Reserve Board disclosed plans to start selling a portfolio of corporate debt purchased through an emergency lending facility launched in 2020. According to the press release, “The Federal Reserve Board on Wednesday announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF), a temporary emergency lending facility that closed on December 31st, 2020. The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers, and bolstering employment through the COVID-19 pandemic.

SMCCF portfolio sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds. The Federal Reserve Bank of New York, which manages the operations of the SMCCF, will announce additional details soon and before sales begin.

The SMCCF was established with the approval of the Treasury Secretary and equity provided by the Treasury Department under the CARES Act.”

There was roughly US$ 13.7 billion outstanding in the Federal Reserve’s Secondary Market Corporate Credit Facility in a range of corporate bond and ETF holdings, according to balance sheet details updated at the end of May 2021.

Keywords: Federal Reserve System.

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