The Federal Reserve announced that the Primary Market Corporate Credit Facility opened for business Monday, the last of its nine pandemic emergency lending programs to become operational.

The program was announced in March as a flight from risk began raising borrowing costs for corporations of all kinds. Partly due to Fed interventions, corporate credit spreads have since narrowed and companies have been able to borrow billions of dollars via new financing to take advantage of cheaper credit costs.

The Fed said in its release that pricing will be issuer-specific and informed by market conditions. Prices will also be subject to minimum and maximum spreads over comparable maturity Treasury securities.

Secondary Market

The Fed unveiled its emergency lending facilities and slashed interest rates to almost zero in a bid to support the economy during the coronavirus pandemic.

Among these is a separate but related lending program called the Secondary Market Corporate Credit Facility. In May, the central bank began buying exchange-traded funds invested in corporate debt through it and earlier this month started purchasing securities of individual issuers.

Details released by the Fed Sunday show that purchases in the Secondary Market facility so far include bonds issued by companies such as AT&T Inc., UnitedHealth Group Inc. and Walmart Inc. Draw-down of this program has been relatively light. As of Tuesday, the Fed had amassed US$8.71 billion of assets including ETFs and individual securities through the program.