The Federal Reserve said that it would start selling the corporate bonds and fixed income funds that it bought to stabilise the financial system last year, unwinding unprecedented emergency measures that electrified markets and brought down borrowing costs for companies reeling from the pandemic.
The US central bank said on Wednesday that assets acquired through its so-called Secondary Market Corporate Credit Facility, or SMCCF, would be sold gradually. The aim is to wrap up the process by the end of the year, according to a Fed official.
The facility, which combined capital from the US Treasury with the central bank’s own resources, acquired corporate bonds and exchange traded funds in the secondary market. It was rolled out in April last year alongside 12 other facilities aimed at supporting a range of debt markets that had come under severe pressure as the US economy shut down.