Under the program the Fed can buy any bonds issued by a company that held an investment grade credit rating even one only a notch above junk status on March 22, when the program was announced. Effectively that means the Fed can buy bonds in the so-called fallen angels, or companies whose bonds have been relegated to junk status after that date.
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Just the announcement of the program worked to thaw a market for high-yield bonds that had been frozen by the onset of the coronavirus pandemic. The stress in credit markets has disappeared and spreads and yields have shrunk.
Access to credit has been plentiful, with the Feds own data showing US non-financial debt increasing by more in the first quarter of this year than at any time in…
Read the full article at: https://www.smh.com.au/business/markets/zombies-are-stirring-as-the-fed-creates-a-monster-debt-problem-20200616-p5531h.html
