May 12 (UPI) -- The Federal Reserve on Tuesday started a corporate bond purchasing program that's intended to help "fallen angel" companies that have been affected by the corornavirus pandemic.
The Fed's Secondary Market Corporate Credit Facility was announced last month as part of a $2 trillion emergency effort to provide debt liquidity as pandemic-related restrictions across the United States forced businesses to close.
The closures initially caused the high-yield, or "junk bond," corporate debt market to freeze. Since the Fed began support efforts in early April, it has rebounded. More than $800 billion in corporate debt has been issued so far this year, up nearly 70 percent from 2019.
The Fed said Monday it's begun to buy shares of exchange-traded corporate bond funds, or ETFs, marking the first time it's ventured into the corporate junk bond market.
The program, under the supervision of the New York Fed, will invest in ETFs specializing in "fallen angel" companies -- those considered worthy but whose credit ratings have been tarnished by the health crisis.
The Fed's criteria for ETF investments include the ratio of investment-grade and non-investment-grade rated debt, management style, the amount of debt held in depository institutions and other factors.
