The Federal Reserve yesterday formally opened its $500 billion lending program to support issuance of new debt by large corporations, the last of nine emergency programs it is running to backstop lending markets reeling from the coronavirus pandemic, the Wall Street Journal reported. The Fed began purchasing earlier this month individual bonds of large companies that were highly rated as of March 22, but it hadn’t yet said when it would initiate a companion effort to purchase newly issued securities by those companies. The Fed is offering two ways for companies to participate in the program. The central bank will purchase eligible syndicated loans and bonds alongside other investors, and it will also buy eligible bonds as the sole investor. For the latter option, the Fed said yesterday that prices for those bonds would be subject to minimum and maximum spreads over yields on government bonds of comparable maturities.
