The Federal Reserve’s historic foray into the credit market has benefitted auto companies the most, supporting an industry that’s borrowed its way through the pandemic and is starting to show signs of recovery, Bloomberg News reported. The central bank can only buy shorter-dated debt of companies that mostly employ Americans, making notes linked to car manufacturers prime candidates. The Fed bought another $224 million of debt tied to auto companies since its last update on July 10, the most of any sector. That debt is now the second-heaviest exposure overall, according to a CreditSights analysis of Fed data released on Monday. Among the Fed’s biggest holdings are the U.S. finance arms of German manufacturers Daimler AG and Volkswagen AG, Japan’s Toyota Motor Co. and Ford Motor Co., strategists led by Jeff Khasin said in a report. While the Fed’s bond investments aim to replicate the broader credit market, the purchases nonetheless support one of America’s biggest home-grown industries. The sector supports nearly 10 million U.S. jobs, and contributes about 3 percent to the domestic economy each year, according to lobbying group the Alliance of Automobile Manufacturers. Outside of financial companies, consumer-cyclical firms, a category that includes car makers, have been the most active issuers of new investment-grade bonds this year, according to data compiled by Bloomberg.
