Fed expands program to help large employers

By Jeff Drew

The Federal Reserve will begin purchasing individual corporate bonds to bolster the availability of credit for large employers, the Reserve Board announced Monday.

The corporate bond buys will be facilitated through the Secondary Market Corporate Credit Facility (SMCCF). The Fed issued a new term sheet for the SMCCF, which was one of two facilities the Fed established in March with Treasury’s approval to facilitate the purchase of as much as $750 billion in corporate debt and exchange-traded funds (ETFs) designed to provide broad exposure to U.S. high-yield corporate bonds and the market for U.S. investment-grade corporate bonds.

The Fed has been making ETF purchases through the SMCCF, but the announcement Monday allows the Fed to buy corporate bonds in the secondary market from investment-grade U.S. companies under certain conditions, which are spelled out in the term sheet and also on a frequently asked questions page.

The SMCCF’s sister program, the Primary Market Corporate Credit Facility (PMCCF), is designed to provide companies access to credit by purchasing qualifying bonds as the sole investor in a bond issuance or purchasing portions of syndicated loans or bonds at issuance. The PMCCF has yet to launch, with the Fed saying on the FAQ page that additional information, including the start date, is forthcoming.

Monday’s announcement comes a week after the Fed announced revisions to the Main Street Lending Program, which also has yet to open.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA’s coronavirus resources page.

Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.