"The Federal Reserve Bank of New York will finance a special purpose vehicle (SPV) for the SPV to purchase qualifying corporate bonds in the secondary market and qualifying ETFs. The Department of the Treasury will make a $75 billion equity investment in the SPV established by the Federal Reserve for this facility and the Primary Market Corporate Credit Facility."
"The SMCCF may purchase in the secondary market (i) corporate bonds issued by investment-grade U.S. companies; (ii) corporate bonds issued by companies that were investment-grade rated as of March 22, 2020, and that remain rated at least BB-/Ba3 at the time of purchase; (iii) U.S.-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. investment-grade corporate bonds; and (iv) U.S.-listed ETFs whose primary investment objective is exposure to U.S. high-yield corporate bonds."
"The combined size of the CCFs will be up to $750 billion. The PMCCF will leverage Treasury’s equity at 10 to 1 when acquiring corporate bonds or syndicated loans from Eligible Issuers that are investment grade at the time of purchase. The PMCCF will leverage Treasury’s equity at 7 to 1 when acquiring corporate bonds or syndicated loans from Eligible Issuers that are rated below investment grade at the time of purchase.
The SMCCF will leverage Treasury’s equity at 10 to 1 when acquiring corporate bonds of issuers that are investment grade at the time of purchase and when acquiring ETFs whose primary investment objective is exposure to U.S. investment-grade corporate bonds. The SMCCF will leverage Treasury’s equity at 7 to 1 when acquiring corporate bonds of issuers that are rated below investment grade at the time of purchase and in a range between 3 to 1 and 7 to 1, depending on risk, when acquiring any other type of eligible asset."
HYG falls under the criteria for these purchases. It's rated BB which is above the ratings needed for the feds to purchase, it's a high yield ETF which also falls under the criteria. You can see there is a bullish wedge forming.
41% of HYG shares are short, which is insane. This could be an upcoming short squeeze. Shorts could be forced to cover because of these Fed purchases. HYG has also seen a 7% increase in units created this last week. All signs seem pretty bullish. I wouldn't normally touch this ETF, as it's literally a junk bond. Go ahead and take a look at its holdings and you'll see why.
I was originally holding 6/19 $84 calls but I swapped those for the $86 strike. Looking for a big move up soon from this slow mover.
Thanks for reading.
"The SMCCF may purchase in the secondary market (i) corporate bonds issued by investment-grade U.S. companies; (ii) corporate bonds issued by companies that were investment-grade rated as of March 22, 2020, and that remain rated at least BB-/Ba3 at the time of purchase; (iii) U.S.-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. investment-grade corporate bonds; and (iv) U.S.-listed ETFs whose primary investment objective is exposure to U.S. high-yield corporate bonds."
"The combined size of the CCFs will be up to $750 billion. The PMCCF will leverage Treasury’s equity at 10 to 1 when acquiring corporate bonds or syndicated loans from Eligible Issuers that are investment grade at the time of purchase. The PMCCF will leverage Treasury’s equity at 7 to 1 when acquiring corporate bonds or syndicated loans from Eligible Issuers that are rated below investment grade at the time of purchase.
The SMCCF will leverage Treasury’s equity at 10 to 1 when acquiring corporate bonds of issuers that are investment grade at the time of purchase and when acquiring ETFs whose primary investment objective is exposure to U.S. investment-grade corporate bonds. The SMCCF will leverage Treasury’s equity at 7 to 1 when acquiring corporate bonds of issuers that are rated below investment grade at the time of purchase and in a range between 3 to 1 and 7 to 1, depending on risk, when acquiring any other type of eligible asset."
HYG falls under the criteria for these purchases. It's rated BB which is above the ratings needed for the feds to purchase, it's a high yield ETF which also falls under the criteria. You can see there is a bullish wedge forming.
41% of HYG shares are short, which is insane. This could be an upcoming short squeeze. Shorts could be forced to cover because of these Fed purchases. HYG has also seen a 7% increase in units created this last week. All signs seem pretty bullish. I wouldn't normally touch this ETF, as it's literally a junk bond. Go ahead and take a look at its holdings and you'll see why.
I was originally holding 6/19 $84 calls but I swapped those for the $86 strike. Looking for a big move up soon from this slow mover.
Thanks for reading.