Fed unveils list, issues details about bond buys

WASHINGTON — The Federal Reserve on Sunday released a list of 750 companies, including Apple, Walmart and ExxonMobil, whose corporate bonds it will buy in the coming months in an effort to keep borrowing costs low and smooth the flow of credit.

The central bank also said it has bought nearly $429 million in corporate bonds from 86 of those companies, including AT&T, Walgreens, Microsoft, Pfizer and Marathon Petroleum.

The Fed announced in March that it would, for the first time, purchase corporate bonds as the intensifying viral outbreak caused panicked investors to dump most types of securities in a rush to hold cash. That pushed up a range of interest rates and made it nearly impossible for companies to borrow more by issuing new bonds.

Yet once the Fed said it intended to buy up to $750 billion of corporate debt, investors began buying bonds again and eventually large companies resumed issuing large amounts of new bonds. Recent economic research has found that simply by announcing the program, the Fed was able to boost confidence in corporate bonds and improve the market’s efficiency.

Fed Chairman Jerome Powell has said that by ensuring large companies can borrow more, the Fed is seeking to keep those firms from having to lay off workers.

But the corporations aren’t required to keep all their workers.

At a hearing last week, Sen. Pat Toomey, R-Pa., questioned Powell about whether the purchases were still necessary, since the corporate bond market has recovered. Powell said the Fed had to follow through on its promises.

To avoid criticism that it might favor a specific industry, the Fed said two weeks ago that it would seek to mimic a broad market index approach and purchase bonds from a wide range of companies.

Consumer product companies, such as Quaker Oats and the distiller BrownForman, which makes Jack Daniel’s and Woodford Reserve whiskeys, make up a third of the index.

That sector is followed by utilities 10% and energy firms at more than 9%.

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