Listed below are the 84 firms whose bonds the Fed purchased, and the 16 bond ETFs it now holds.
By Wolf Richter for WOLF STREET.
The Federal Reserve disclosed Sunday afternoon the quantities and the corporate names of the company bonds that it began shopping for for the primary time ever within the week ended Friday, June 19. They’re not even rounding errors on the Fed’s stability sheet. The purchases of particular person company bonds amounted to $428 million (with an M). By comparability, within the week ended April 1, when the Fed was doing a whole lot of heavy respiration, it purchased $362 billion (with a B) of Treasury securities.
As well as, the Fed stated within the disclosure that it held a complete of $6.Eight billion in bond ETFs as of June 19, up from $1.5 billion a month in the past.
These bond ETFs and particular person company bonds mixed account for 1/10th of 1% of the Fed’s $7.1 trillion in whole belongings.
The Fed buys these company bonds and bond ETFs in its Particular Goal Car that it calls Secondary Market Company Credit score Facility (SMCCF). Just like the Fed’s different alphabet-soup bailout SPVs, the SMCCF is an LLC entity.
The SPV is funded in two methods: One, with fairness capital offered by the US Treasury Division, or relatively by taxpayers, or relatively by authorities borrowing, to cushion the Fed towards losses; and two, by loans from the Fed at a leverage of 10 to 1. Then the SPV buys company bonds and bond ETFs within the open markets by way of the Fed’s main sellers. The New York Fed handles all the small print.
All these purchases and holdings have been already mirrored on the Fed’s prior weekly stability sheets by way of the full quantities. Right this moment’s disclosure simply gives the company-specific particulars.
The Nitty Gritty.
The bonds that the Fed bought have been issued by 84 firms, in industries starting from tobacco to video video games, throughout the spectrum of US firms, and US subsidiaries of overseas firms (similar to Toyota’s US finance subsidiary). The issuers embrace a number of of Warren Buffett’s firms, all types of power firms, and a few junk-rated firms, similar to Ford.
However not a whole lot of junk on the record.
When it comes to junk bonds, there isn’t a lot. Solely 3.62% of its bond portfolio is now rated BB (BB+, BB, BB-), the highest class of junk. This contains Ford (BB+). The Fed didn’t purchase any bonds rated CCC or beneath. With 3.62% of the full company bond portfolio ($428 million) being junk bonds, the quantity of junk bonds it holds come to $15.5 million.
The classes AAA, AA, and A account for 48.07% of the bonds. The class of BBB, the bottom investment-grade class, accounts for 48.31%.
The typical maturity of the bonds is 3.Three years, starting from 11 months (a Chevron bond that matures in May 2021) to 5 years (a Honeywell bond that matures in June 2025). Considerably, there are not any long-dated maturities on this portfolio.
When these bonds mature, the corporate pays the Fed face value of the bonds, and the bond disappears off the Fed’s stability sheet. If the maturing bond shouldn’t be changed, the SPV can use the proceeds to pay down the loan the Fed issued.
By retaining maturities within the one-to-five-year vary, the Fed seems to be setting the stage for letting the bonds roll off its stability sheet and be completed with this system as soon as the disaster is over.
AT&T is on the high of the record, with $16.5 million of bonds. The smallest place is Hyatt at $1.09 million – simply symbolically dabbling right here, actually, since resort bonds may get dicey.
There are additionally bonds from Southwest, however no bonds issued by American Airways, Delta, or United, which might have spiced up the portfolio in a nerve-wracking method for certain.
The desk beneath exhibits the businesses whose bonds the Fed bought. If the Fed bought a number of forms of bonds from one firm, or from an organization’s subsidiary, I added them collectively. For instance, the bonds of IBM Corp and IBM Credit score are added collectively underneath “IBM.”
Issuer
Maturity Date
Buy Quantity $
1
AT&T INC
07/15/2021
16,476,295
2
UNITEDHEALTH GROUP
07/15/2022
16,451,866
3
COMCAST
04/15/2024
13,315,347
4
ANTHEM
05/15/2022
12,937,096
5
IBM
05/13/2022
10,631,583
6
MICROSOFT
02/06/2022
8,855,357
7
WALMART
06/26/2023
8,758,532
8
CONSTELLATION BRANDS
02/15/2023
8,465,435
9
FORD MOTOR COMPANY
04/21/2023
8,051,573
10
CVS HEALTH CORP
03/25/2025
7,762,008
11
BOEING CO
05/01/2023
7,648,613
12
GENERAL ELECTRIC CO
09/07/2022
7,403,280
13
ABBVIE INC
10/01/2022
7,394,460
14
MEDTRONIC INC
03/15/2022
6,658,502
15
COCA-COLA CO
03/25/2025
6,652,748
16
PEPSICO INC
04/30/2025
6,637,973
17
SABINE PASS LIQUEFACTION
03/15/2022
6,512,097
18
MCDONALD’S CORP
01/15/2022
6,488,806
19
BECTON DICKINSON AND CO
06/06/2022
6,342,504
20
PHILIP MORRIS INTL
11/10/2024
6,236,320
21
BERKSHIRE HATHAWAY ENERG
04/15/2025
5,774,200
22
PROLOGIS LP
08/15/2023
5,622,744
23
MARATHON PETROLEUM
05/01/2025
5,543,247
24
GENERAL MILLS
10/17/2023
5,535,298
25
FLORIDA POWER & LIGHT
04/01/2025
5,506,758
26
LOWE’S COS
04/15/2022
5,492,097
27
PFIZER INC
09/15/2023
5,458,757
28
SYSCO CORPORATION
03/15/2025
5,452,704
29
BP CAP MARKETS AMERICA
04/06/2025
5,433,591
30
MASTERCARD
04/01/2024
5,430,832
31
MARRIOTT INTERNATIONAL
05/01/2025
5,416,798
32
GILEAD SCIENCES
09/01/2022
5,331,400
33
EVERSOURCE ENERGY
10/01/2024
5,312,492
34
VISA INC
12/14/2022
5,283,044
35
EXXON MOBIL
08/16/2024
5,211,729
36
WALGREENS BOOTS ALLIANCE
11/18/2021
5,169,408
37
ENERGY TRANSFER OPERATNG
01/15/2024
5,156,184
38
DUPONT DE NEMOURS INC
05/01/2023
5,122,159
39
CHEVRON
05/11/2025
5,113,264
40
TOYOTA MOTOR CREDIT
08/25/2023
5,070,899
41
CATERPILLAR FINL SERVICE
05/13/2022
5,045,104
42
PACCAR FINANCIAL
04/06/2023
4,756,010
43
FOX CORP
01/25/2024
4,509,400
44
HEALTHPEAK PROPERTIES
08/15/2024
4,469,758
45
INTERCONTINENTALEXCHANGE
10/15/2023
4,461,760
46
FISERV INC
10/01/2023
4,412,613
47
DELMARVA PWR & LIGHT CO
11/15/2023
4,383,302
48
VMWARE INC
05/15/2025
4,381,185
49
3M COMPANY
04/15/2025
4,356,304
50
EASTMAN CHEMICAL
08/15/2022
4,238,120
51
GEORGIA POWER CO
07/30/2023
4,208,827
52
HP ENTERPRISE CO
04/01/2023
4,143,570
53
CARGILL INC
07/23/2023
4,078,236
54
HUMANA INC
04/01/2025
4,052,405
55
AUTOZONE INC
04/15/2025
3,376,393
56
DTE ELECTRIC CO
03/01/2025
3,373,695
57
FEDEX CORP
05/15/2025
3,360,613
58
BURLINGTN NORTH SANTA FE
09/01/2024
3,339,810
59
VIRGINIA ELEC & POWER
05/15/2025
3,300,755
60
AVANGRID INC
04/15/2025
3,288,007
61
PROCTER & GAMBLE
03/25/2025
3,266,060
62
PHILLIPS 66
04/01/2022
3,227,510
63
PAYPAL HOLDINGS
10/01/2024
3,201,220
64
UNITED PARCEL SERVICE
04/01/2023
3,174,262
65
HONEYWELL INTERNATIONAL
06/01/2025
3,072,735
66
DIAMONDBACK ENERGY INC
12/01/2024
3,007,643
67
CAMPBELL SOUP CO
03/15/2025
2,847,410
68
REALTY INCOME CORP
08/01/2023
2,799,115
69
CME GROUP INC
03/15/2025
2,785,633
70
FIRSTENERGY CORP
03/15/2023
2,736,443
71
REPUBLIC SERVICES INC
08/15/2024
2,682,653
72
EDISON INTERNATIONAL
11/15/2024
2,651,085
73
HOME DEPOT INC
06/01/2022
2,613,999
74
NUCOR CORP
06/01/2025
2,584,961
75
ARES CAPITAL CORP
06/10/2024
2,562,600
76
GENERAL MOTORS FINL CO
03/20/2023
2,156,573
77
NIKE INC
03/27/2025
2,154,373
78
DOLLAR GENERAL CORP
04/15/2023
2,140,035
79
WILLIAMS COMPANIES INC
03/15/2022
2,103,140
80
SOUTHWEST AIRLINES
05/04/2023
2,102,015
81
PHILLIPS 66 PARTNERS LP
12/15/2024
2,069,484
82
DUKE ENERGY CORP
04/15/2024
1,663,630
83
ACTIVISION BLIZZARD
06/15/2022
1,558,645
84
HYATT HOTELS CORP
04/23/2025
1,090,262
Company Bond ETFs.
On the finish of May, the Fed disclosed that it had bought $1.5 billion in company bond ETFs by May 18. Since then, the Fed has bought extra bond ETFs, and the market value as of June 18 of all its ETF holdings mixed had elevated to $6.Eight billion.
This contains a number of junk-bond targeted ETFs, however the quantities are small. For instance, its holdings of the favored iShares iBoxx Excessive Yield Company Bond ETF [HYG] are solely $245.Eight million:
Ticker
Fund Identify
Market Worth, June 18, $
LQD
iShares iBoxx US Greenback Funding Grade Company Bond ETF
1,782,971,624
VCSH
Vanguard Quick-Time period Company Bond ETF
1,307,906,475
VCIT
Vanguard Intermediate-Time period Company Bond ETF
1,037,071,572
IGSB
iShares Quick-Time period Company Bond ETF
607,806,116
JNK
SPDR Bloomberg Barclays Excessive Yield Bond ETF
411,874,114
SPIB
SPDR Portfolio Intermediate Time period Company Bond ETF
404,663,795
IGIB
iShares Intermediate-Time period Company Bond ETF
397,995,018
HYG
iShares iBoxx Excessive Yield Company Bond ETF
245,782,706
SPSB
SPDR Portfolio Quick Time period Company Bond ETF
237,257,161
USIG
iShares Broad US Greenback Funding Grade Company Bond ETF
150,392,808
HYLB
Xtrackers US Greenback Excessive Yield Company Bond ETF
56,224,553
USHY
iShares Broad US Greenback Excessive Yield Company Bond ETF
49,015,670
SLQD
iShares 0-5 Yr Funding Grade Company Bond ETF
43,799,540
ANGL
VanEck Vectors Fallen Angel Excessive Yield Bond ETF
28,862,665
SHYG
iShares 0-5 Yr Excessive Yield Company Bond ETF
23,341,086
SJNK
SPDR Bloomberg Barclays Quick Time period Excessive Yield Bond ETF
20,741,161
Going ahead…
The Fed will seemingly proceed to purchase some company bond ETFs and particular person company bonds. However the bond market is at the moment red-hot. Spreads have tightened. And even American Airways and Carnival Corp have been in a position to difficulty new bonds although their revenues have collapsed. They want billions of {dollars} in new gas to burn to get by this disaster, they usually bought the primary pile of it from traders.
The Fed seems at this as an indication of success – that it basically has completed its job to maintain credit score flowing to those firms, and that it actually doesn’t must do far more. So now, it’s dabbling in these bond purchases, dabbling by Fed requirements, the place massive strikes are counted in a whole bunch of billions of {dollars}, not in hundreds of thousands or just a few billion.
On the opposite facet of the coin.
In actuality, the Fed has been pushing up bond costs and stock costs to bail out asset holders in order that they’ve completely no pores and skin within the disaster, and this technique has widened by an enormous quantity the already large wealth disparity between asset holders and labor within the US – and the larger the asset holders, the extra they bought from the Fed.
It additionally creates the notion that the Fed will at all times bailout asset holders, and that there’s by no means a price to pay for any downturns, and that solely individuals who work for a dwelling should pay that price.
What’s so insidious concerning the Fed’s bailouts of traders in hedge funds, mortgage-REITS, stocks, bonds, leveraged loans, and different typically dangerous belongings? The destruction of capitalism. Learn… America Convulses in Ache, Fed Bails Out the Rich
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