The Federal Reserve enlisted BlackRock as investment manager and adviser for three new programs aimed at supporting the U.S. economy amid the coronavirus pandemic.
Two of the three appointments relate to the Fed's new measures to ensure credit continues to be available to large employers: The primary market corporate credit facility, providing new bond and loan issuance; and the secondary market corporate credit facility, providing liquidity for outstanding corporate bonds.
BlackRock's financial markets advisory unit was appointed as investment manager for both the PMCCF and the SMCCF, the New York branch of the central bank said Tuesday on its website.
The PMCCF will allow access to credit so companies can better maintain their operations throughout the "period of dislocations" related to COVID-19. Investment-grade companies can access bridge financing for four years. Companies can also defer interest and principal payments for the first six months of the loan to ensure they have enough cash to pay employees and suppliers.
The Fed said it will finance a special purpose vehicle to make loans from the new PMCCF to these companies. Further, the Treasury Department will take an equity stake in the vehicle, using the Exchange Stabilization Fund, the Fed said in a separate announcement Monday.
The SMCCF will support large employers by providing liquidity for outstanding corporate bonds. It will purchase secondary market corporate bonds issued by investment-grade U.S. companies and exchange-traded funds that have investment objectives "to provide broad exposure to the market for U.S. investment grade corporate bonds," the Fed said. The Department of the Treasury will also take a stake in a special purpose vehicle established for this facility.
"BlackRock was selected for this role after considering their expertise with purchasing large amounts of all relevant types of corporate debt issuance and corporate bonds in the secondary market, deep knowledge and substantial experience in the corporate debt markets, and robust operational and technological capabilities," the New York Fed said in both its PMCCF and SMCCF announcements.
BlackRock's financial markets advisory unit was also appointed on a short-term basis as investment manager for the Fed's planned purchase of agency commercial mortgage-backed securities. Figures could not immediately be learned.
The New York Fed said it "retained BlackRock Financial Markets Advisory as a third-party vendor to operationalize these purchases and transact with the primary dealers on behalf of the (System Open Market Account.)"
Details on the existing relationship between the Fed and BlackRock were not immediately available.