On Monday, March 23, 2020, in response to the evolving economic crisis created by the COVID-19 epidemic, US Treasury and the Federal Reserve authorized the establishment of two new facilities to support credit for large employers:

  • The Primary Market Corporate Credit Facility (PMCCF) will provide credit for new bond and loan issuance by directly purchasing eligible corporate bonds from investment grade issuers.
  • The Secondary Market Corporate Credit Facility (SMCCF) will provide liquidity for outstanding corporate bonds and eligible exchange-traded funds (ETFs) by buying corporate bonds and ETFs in the secondary market.

The Federal Reserve will use authority granted by Section 13(3) of the Federal Reserve Act to lend to a special purpose vehicle (SPV) to support the vehicle’s purchases. The programs were approved by the US Treasury in initial amounts of $10 billion, with funds provided from Treasury’s Exchange Stabilization Fund (ESF). SMCCF and PMCCF were not used during the 2008 financial crisis.

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