June 15, 2020 / 6:03 PM / 18 days ago

Fed revises corporate bond purchase program to include an indexing approach

June 15 (Reuters) - The Federal Reserve said on Monday that it will update its secondary market corporate credit facility to include an indexing approach, aiming to create a portfolio that is based on a broad, diversified market index of U.S. corporate bonds.

The facility, which began purchasing shares of exchange-traded funds in mid-May, is one of the Fed’s recently created tools meant to improve market functioning in the wake of the coronavirus pandemic, which has led to substantial market volatility.

Corporate bond purchases will be based on an index that 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,” the Fed said on Monday. (Reporting by Jonnelle Marte and Lindsay Dunsmuir, Editing by Franklin Paul)

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