Fed Announces Revised Terms of Secondary Market Corporate Credit Facility

The Federal Reserve this morning revised the terms of its Secondary Market Corporate Credit Facility, the temporary program announced last month to support corporate bond market liquidity.

The revised term sheet can be viewed here.

The program will now support some “fallen angels,” issues whose ratings are as low as BB-/Baa3 but that were investment grade rated on March 22, the day before the facility was announced and were subsequently downgraded.   If rated by multiple major NRSROs, such an issuer must be rated at least BB-/Ba3 by two or more NRSROs at the time the Facility makes a purchase

It is the first time the Fed has committed to support the high yield market under extraordinary market support programs.

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