The acquisition of exchange-traded funds (ETFs) by the Federal Reserve began on 12th May 2020, under its Secondary Market Corporate Credit Facility (SMCCF). The SMCCF is a special purpose vehicle (SPV), partly funded by a US$75 billion investment from the US Treasury, established to support corporate bond markets and thereby the funding of corporates.
The SMCCF can buy eligible corporate bonds and US-listed ETFs whose investment objectives are to provide broad exposure to the market for US corporate bonds. Such corporate bonds and ETFs must meet the eligibility criteria specified in the SMCCF term sheet.
In this episode of ETF TV, Deborah Fuhr and Dan Barnes of ETF TV speak with Paolo Giulianini about the Fed’s model for buying ETFs plus the effect it will have upon the market activity and liquidity.