Federal Reserve Buys Bonds of Apple, Verizon and Others

Apple and Verizon bonds are among those bought by the Federal Reserve in the agency's effort to support the corporate-debt market.
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Apple  (AAPL) - Get Report, Verizon  (VZ) - Get Report and the U.S. divisions of several foreign automakers were reportedly among the largest direct beneficiaries of the Federal Reserve's efforts to support the corporate-debt market.

The Fed on Sunday identified a total of 794 companies whose bonds it will buy directly to support the market for investment-grade corporate debt, The Wall Street Journal reported.

In addition to Apple and Verizon, recipients include AT&T  (T) - Get Report, 3M  (MMM) - Get Report, Adobe  (ADBE) - Get Report, and the U.S. units of Toyota Motor  (TM) - Get Report, Volkswagen  (VLKAF) , and Daimler (DMLRY) .

At last check all the stocks of the companies, except for Adobe, were higher.

The list includes debt from across 12 different sectors. Consumer cyclical and consumer noncyclical industries account for more than one-third of corporate bonds the central bank planned to purchase, according to the latest disclosures.

The coronavirus economic shutdown brought the economy to a virtual standstill. The Fed said in March that it would buy corporate debt to prevent the market from freezing up and squeezing companies of cash.

The Fed's corporate-debt program is structured in different phases. The Fed plans to purchase up to $250 billion of debt already issued by companies. Later it plans to purchase up to $500 billion in newly issued bonds.

In May, the Fed started buying exchange-traded funds that hold investment-grade and junk bonds. 

The Fed this month started buying actual corporate bonds, and not just ETFs. The latest disclosures included for the first time the actual bonds it started buying this month.

The Fed accumulated a total of $8.7 billion in corporate debt through the middle of last week.

The central bank will recalculate the list of its potential purchases every four or five weeks to add companies that meet the eligibility requirements and to remove those that no longer qualify.