Toyota, Volkswagen, And Daimler: Here Are The Corporate Bonds The Fed Is Buying The Most

Two weeks ago, the Fed sparked a mini market rally after it announced again that it would buy corporate bonds (not just ETFs); something it had said it would do three months prior, yet which neither the algos or the Robinhooders ever quite grasped. This sent stocks soaring, even though it wasn't actual news.

That said, there was some actual news in the Fed's announcement.

Recall that initially, the Fed's Secondary Market Corporate Credit Facility, or SMCCF, was structured to hold two types of investments: "Eligible Individual Corporate Bonds" and "Eligible ETFs." On Monday, June 15, the Fed introduced a third category: "Eligible Broad Market Index Bonds." This new category allows the Fed to immediately begin buying individual corporate bonds in much larger volume than previously anticipated (for more read "The Fed's $250 Billion Debt-Buying "Index" Loophole").

And while it remains unclear just how static the index is or will be, on Sunday, the Fed finally unveiled the constituents of said Index of "Eligible Broad Market" bonds: it consists of 794 names ranging from auto giants Toyota (TM), Volkswagen, and Daimler (DDAIF) at the top, all the way through Valspar (VAL), Washington Gas Light (WGL), and Westside Intermodal. This is what the Fed said:

The Broad Market Index is intended generally to track the composition of the broad, diversified universe of secondary market bonds that meet the criteria specified in the Term Sheet for Eligible Broad Market Index Bonds, subject to generally applicable issuer-level caps specified by the Term Sheet.

It will be recalculated at least every four to five weeks, and the list of bonds that are eligible for purchase will be refreshed more frequently to add or remove those bonds that newly meet or no longer meet the eligibility requirements. The Broad Market Index will be published roughly once a month.

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