Fed Takes In Fallen Angels, Will Buy Junk Bonds, High Yield ETFs
Are you concerned about "fallen angel" risk in the credit market?
Put differently, are you someone who's spent the last month obsessing over the apparently imminent realization of the long-feared "BBB apocalypse"?
Well, don't be - concerned, that is. Because the Fed will now buy high yield bonds.
The updated term sheet for the secondary market corporate credit facility released in conjunction with a raft of new measures and enhancements to existing facilities on Thursday morning, includes n
Certainly will forestall bankruptcies. Is this all on that 4 year timetable. I have been reading 6 or 8 hours a day and simply feel like a first semester college student cramming. Thanks for being an upperclassman Mr H.
So the FED buy junk bonds of a corp. The corp goes into bk anyway, it’s restructured (ie bonds become equity) and the FED ends up owning a chunk of the corp?
Might this be the intended …unintended consequences….??? lol…
Anything to keep the S&P500 above 2271
The zombies find a friend.
Indeed.
Paraphrasing something I saw on FinTwit: CB policy creates zombie companies, and good companies are destroyed by their zombie competitors.
And so do state pension funds which usually by law cannot hold junk. There will be plenty for the Fed to buy and from sellers we cannot afford to become distressed. But don’t be surprised if it turns out that Jerome’s favorite opera is “The Barber of Seville.”
Well, now, fallen angels have a home. They are welcome (with some stipulations) at the Fed’s house, onto which Jerome Powell is furiously building new wings to accommodate the increasingly diverse population of “refugee” assets he’s inclined to shelter and feed.” Ah that is a thing of beauty, a Heisenberg quote classic