Can the Federal Reserve Jumpstart the Distressed Debt Markets?
As the Federal Reserve exits the corporate bond market, could a debt market revival be on the horizon?
July 06, 2021 at 10:00 AM
6 minute read
Rewards abound as we slowly emerge from the pandemic. Those with a vaccinated seal of approval can remove their masks outside and even receive a free donut at Krispy Kreme. Fresh air, surviving 2020 and a sugar high—talk about incentives! The Federal Reserve is rewarding the markets with new inventory to trade. While the Federal Reserve may not be handing out free donuts, it is selling its portfolio of investment grade corporate bonds.
On June 2, 2021, the Federal Reserve issued a press release with its plans to "begin winding down the portfolio of the Secondary Market Corporate Credit Facility." This facility was one of many corporate credit facilities the Federal Reserve created during the pandemic. The government stepped in at the right time with an emergency lending facility for newly issued corporate debt and existing corporate debt.
Now is the right time to leave the free market as a free market and sell back the corporate debt that was purchased during an exigent time. The corporate debt market was artificially buoyed with a low interest rate. In turn, less companies defaulted, and the secondary trading markets are slow, if not stifled. The Federal Reserve's actions will strategically infuse the markets with a corporate debt to trade and hopefully revive the debt markets.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllSEC Increases Scrutiny of Fund Administrators, Financial Attorneys Say Amid Settlements
4 minute readSchwab Gasparini Partner Wins Series of Accidental Retirement Disability Cases in Albany Appeals Court
Soon-to-Be-Public Stock Trading Platform Hires Securities Industry Veteran as GC
Law Firms Mentioned
Trending Stories
- 1Deception or Coercion? California Supreme Court Grants Review in Jailhouse Confession Case
- 2State Bar of Georgia Presents Access to Justice Pro Bono Awards
- 3Tips For Creating Holiday Plans That Everyone Can Be Grateful For
- 4Red Tape, Talent Wars & Pricey Office Space Greet Firms Entering Saudi Arabia
- 5A Funny Thing Happened on the Way to Becoming Clerk of the Forum
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250