The Fed is buying some of the biggest companies’ bonds, raising questions over why

The Fed is buying some of the biggest companies’ bonds, raising questions over why

A woman walks past the U.S. Federal Reserve building in Washington D.C., May 21, 2020.

Ting Shen | Xinhua News Agency | Getty Images

As the Federal Reserve moves deeper into its purchases of corporate debt, it faces more questions about the consequences of its unprecedented market interventions.

Disclosures filed this week surrounding its credit facilities show the Fed is not only buying the bonds of struggling companies hit hard by the coronavirus pandemic but also some of the stalwarts of American industry “” Microsoft, Visa and Home Depot just to name three companies whose debt the Fed holds directly. 

The Fed holds an expansive list of other companies indirectly, including names like Apple and Goldman Sachs, through exchange-traded funds it has purchased.

In addition, it has purchased bonds in speculative-grade companies as well as ETFs, including the SPDR Bloomberg Barclays High Yield Bond, a fund in which the Fed holds a $412 billion position.

When the Fed expressed its intent to buy corporate bonds, it was a major moment both for the institution and the bond market, which had frozen up amid fears of the damage the coronavirus would cause to the economy. But with that decision also came questions over the probity of such a