June 15 (UPI) -- The Federal Reserve said Monday it will expand its buying of corporate bonds to support credit for large employers.
The central bank updated its Secondary Market Corporate Credit Facility to expand its reach to now also buy individual corporate bonds, along with exchange-traded funds, a Federal Reserve statement shows.
The goal is "to support market liquidity and the availability of credit for large employers," by forming a "corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds," the statement said. "This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility's minimum rating, maximum maturity, and other criteria. This indexing approach will complement the facility's current purchases of exchange-traded funds."
The Treasury Department has provided the SMCCF $25 billion in equity and the Primary Market Corporate Credit Facility $50 billion in equity from the $2 trillion CARES Act.
The Federal Reserve said the support will boost spending power to buy corporate debt to $750 billion.
It announced the SMCCF and the PMCCF on March 23, to tap financing markets amid the coronavirus pandemic.