Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


The COVID-19 pandemic reached a critical stage in early 2020 causing severe distress and disruption in financial markets, and the United States government declared a federal state of emergency in the second week of March. As institutional investors including mutual funds, pension funds, and insurance companies withdrew from corporate bond markets and funding options for large US businesses dried up, the Federal Reserve became concerned that solvent businesses might have difficulty financing their operations. On March 23, the Federal Reserve Board invoked Section 13(3) of the Federal Reserve Act, creating two novel emergency lending facilities to support the corporate bond market: The Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF). These corporate credit facilities (CCFs) authorized the Federal Reserve Bank of New York to create and lend to a special purpose vehicle (SPV) up to a combined $750 billion to purchase individual corporate bonds and exchange-traded funds (ETFs), and broad market index bonds. The Treasury committed to provide first-loss protection for the facilities through equity investments in the SPV up to $75 billion, using funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The SMCCF became operational on May 12 while the PMCCF became operational June 29. Usage of the SMCCF facilities peaked at $14.1 billion in December 2020; the PMCCF did not make any purchases.

Date Revised