Securities Law News

Fed’s Debt Traders Hit With Instant Loss on a Corporate Bond (1)

July 13, 2020, 6:01 PM

Add one more unlucky investor ensnared in Waste Management Inc.’s $3 billion, weeks-long debt tussle: the Federal Reserve.

The central bank bought about $3 million of the company’s bonds due 2024 at around 105 cents on the dollar, but they’ll be redeemed at 101 cents on Tuesday. That will amount to a roughly $120,000 loss in principal on the debt purchased on June 23, according to the Fed’s latest update to its secondary market facilities purchases.

While hardly a massive loss for an institution with a nearly $7 trillion balance sheet, the transaction highlights the risks central...

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