The Fed Is an Axed Buyer—Use FIW To Analyze Which Bonds It May Purchase
The Fed Is an Axed Buyer—Use FIW To Analyze Which Bonds It May Purchase
ON APRIL 9 the U.S. Federal Reserve announced it was taking action to provide as much as $2.3 trillion in lending to support the economy.

One part of the plan called for expanding three programs so they would support $850 billion in credit. These facilities are the Primary Market Corporate Credit Facility (PMCCF), the Secondary Market Corporate Credit Facility (SMCCF), and the Term Asset-Backed Securities Loan Facility (TALF). Under the SMCCF the Fed plans to purchase in the secondary market corporate bonds that meet the facility’s specific eligibility requirements. (A link to the SMCCF’s full term sheet is available on the Fed’s website at monetarypolicy/smccf.htm.)

You can use the Fixed Income Worksheet (FIW) to find bonds that meet the Fed’s investment criteria, in the same way you might identify securities for a portfolio manager who allocated a new sleeve of funding (though the number of zeros for the Fed is larger, of course). FIW enables you to quickly analyze large universes of securities to find the best value. (This article is the seventh in a continuing series on FIW. Type {NSN Q8S981T0AFBQ } to see the others.)

For U.S. clients, FIW comes preloaded with LBUSSTAT, the Bloomberg Barclays US Aggregate Bond Index, a broad-based benchmark of investment-grade, U.S.-dollar-denominated bonds. To find bonds that match the SMCCF criteria, a logical place to start is​ LBUSSTAT with its more than 11,000 securities. You could also use other indexes or even exchange-traded funds.


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June - July 2020