Fed adds Apple, Anheuser-Busch, Expedia to its bond holdings

By Ann Saphir and Jonnelle Marte (Reuters) - The U.S.

Reuters July 11, 2020 00:07:06 IST
Fed adds Apple, Anheuser-Busch, Expedia to its bond holdings

Fed adds Apple AnheuserBusch Expedia to its bond holdings

By Ann Saphir and Jonnelle Marte

(Reuters) - The U.S. Federal Reserve added $1.33 billion in bonds of individual companies from June 22 to June 30, including iPhone maker Apple Inc, beer-producer Anheuser-Busch and travel booker Expedia Group.

The bond purchases, all on the secondary market, bring the Fed's holdings of individual corporate bonds to $1.59 billion, according to the latest of what will be monthly reports to Congress on the Fed's emergency lending facilities to nurse the economy through the coronavirus pandemic.

In all, the Fed's portfolio included 330 issuers, led by $26.9 million of Verizon Communications bonds, $26.3 billion of AT&T Inc bonds, and $25.5 billion of Apple bonds.

Holdings also included $3.2 billion of Expedia and $10.1 billion of Ford Motor Co, whose debt rating was downgraded to junk after the coronavirus crisis hit.

The Fed also held $7.97 billion in 16 corporate bond exchange traded funds (ETF), the data showed. Roughly half of the corporate bond ETF shares purchased went to funds owned by BlackRock, which is managing the Fed's corporate credit facilities. BlackRock waived asset management fees on ETFs purchased on behalf of the Fed.

Other global central banks have bought individual corporate bonds for years, but the program is new for the Fed during this pandemic. The aim is to ensure companies can continue to finance themselves, and not be forced into bankruptcy because they are unable to raise needed cash.

The program is backed by investment capital from the U.S. Treasury to absorb any losses from defaults.

The Fed has reduced the pace of corporate bond purchases made in the secondary market from about $300 million daily to slightly less than $200 million a day, and it could stop the purchases entirely if market conditions keep improving, Daleep Singh, executive vice president of the New York Federal Reserve said this week.

(Reporting by Ann Saphir and Jonnelle Marte; Editing by Chizu Nomiyama and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.