The Federal Reserve thawed credit markets in March by promising a whatever-it-takes program to buy corporate bonds. Ten weeks later, the Fed has yet to buy a single bond, the Wall Street Journal reported. Just the announcement of the backstop ended panic selling, boosted prices and fueled a record surge of new corporate-bond sales. Companies are now reluctant to sign up for Fed purchases because such a move could be seen as a sign of weakness during a market rebound, some bond fund managers and bank executives said. The Fed has yet to officially launch the initiative, which enables it to buy limited amounts of new and pre-existing bonds of companies, in part because it is hashing out the technical details. Only companies that certify they are U.S.-based and haven’t received other aid under the CARES Act — a $2 trillion financial-relief package that includes loans and grants to businesses — can participate in the program, which would disclose their names, the amount of their bonds that the Fed would purchase and the prices paid. Those terms “could give bond issuers pause, especially those that already have access to the markets,” said Arvind Narayanan, co-head of investment-grade credit at Vanguard Group, which manages $1.8 trillion of fixed-income assets.
