From March to April, the Fed intensively offered 9 emergency loan tools to rescue the market.
On May 4, local time, the New York Federal Reserve announced the primary market enterprise credit facility (PMCCF, used to support corporate borrowing) and the secondary market that came into effect last month. The question and answer of the Corporate Credit Tool (SMCCF, used to support the liquidity of corporate bonds) introduces the purpose and design of these two corporate credit tools (CCF), which specifically answers the question of when these CCF will operate.
The Fed said that it will begin purchasing qualified ETFs through the SMCCF in early May. It is expected that soon thereafter, PMCCF will begin to operate, and SMCCF will also begin to purchase qualified corporate bonds. As these dates approach, more details about the launch time will be announced.
On March 23, the Fed established the PMCCF and SMCCF, and announced on April 9 the expansion of the two, as well as the asset fixed asset guarantee securities loan mechanism (TALF) Scale, increase the inflow of credit to households and businesses through the capital market. These three projects will provide a total of 850 billion US dollars of credit funds, and will reduce the purchase bond rating from the lowest BBB grade (investment grade) to BB-grade (junk debt).
Through PMCCF, the Federal Reserve will provide loans to investment-grade enterprises in the primary market directly through special purpose vehicles (SPV) and provide bridge financing for four years. SMCCP mainly purchases secondary market bonds issued by investment-grade companies, and at the same time purchases exchange-traded funds (ETFs) listed in the United States and whose investment scope is bonds with a rating of BB- (inclusive) or higher.
To help American families and businesses have adequate credit support during the epidemic, the Fed has launched nine emergency loan projects, PMCCF and SMCCF are some of these initiatives. However, to date, although the size of the Fed ’s balance sheet has increased significantly, only nine of the nine major projects have been activated; not only is the number small, but the scale of funds invested through these four tools is also limited.
According to the National Finance and Development Practice