Junk bond prices rally after Fed offers a lifeline

NEW YORK, April 9 (Reuters) – Prices on individual U.S. junk bonds and exchange-traded funds tracking the market soared on Thursday morning after the Federal Reserve announced that it would expand its corporate bond-buying program to include some speculative-grade debt.

The broad $2.3 trillion package is the Fed’s latest endeavor to keep the U.S. economy intact as the country battles the coronavirus pandemic. The primary market facility specifies that companies recently downgraded from investment grade to the first tier of junk will be eligible for the program. That includes companies like Ford Motor which saw its stock price jump 13%.

The Fed’s secondary market facility will buy eligible high-yield exchange-traded funds, which sent prices of the iShares iBoxx High Yield Corporate Bond Fund and the SPDR Bloomberg Barclays High Yield Bond ETF both up more than 8%. (Reporting by Kate Duguid Editing by Chizu Nomiyama)

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