The Federal Reserve bought $428 million in corporate bonds through mid-June as part of its sweeping response to the coronavirus pandemic, making investments in well-known companies like Coca-Cola, Microsoft, McDonald’s, Walmart and a subsidiary of Warren Buffett’s Berkshire Hathaway.
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A transaction list disclosed by the U.S. central bank on Sunday shows the first individual company bond purchases it's made through the secondary market corporate credit facility. In total, the Fed bought debt in about 86 different companies as it tries to insulate the nation's economy from the worst downturn since the Great Depression.
The transactions show the Fed bought about $5.7 million of Berkshire Hathaway Energy, the energy subsidiary of Warren Buffett's sprawling conglomerate. It also snapped up $6.6 million in Coca Cola, $3.4 million in Walmart, $5.7 million in Microsoft and $4.4 million in McDonald's.
The Fed also purchased:
- $7.6 million corporate debt from Boeing
- $3.4 million in corporate debt from Marriott
- $5.3 million in corporate debt from Gilead Sciences (the company working on a potential COVID-19 vaccine)
- $4.9 million in corporate debt from Ford
Additionally, the Fed purchased more than $16 million in debt from WarnerMedia owner AT&T, as well as more than $13 million in debt from NBCUniversal owner Comcast and $4.5 million in debt by Fox Corp., the parent company of FOX Business.
It also released a list of about 750 companies, including Apple, whose corporate bonds it will purchase in the coming months.
Under the program, the Fed purchases existing bonds on the open market rather than newly issued debt. The Fed has said it will purchase up to $750 billion of corporate debt.
Fed Chair Jerome Powell has said that by guaranteeing that large companies can borrow more, the central bank is trying to help those firms avoid bankruptcy and layoffs. The corporations are not required to keep their workers.
Once the Fed said it intended to purchase 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.
The Fed will only buy highly rated debt from financially healthy companies, or ones that were highly rated before the pandemic struck. The Fed is legally barred from lending to insolvent companies. It has said it would report on its purchases every 30 days.
The Associated Press contributed to this report