Bank for International Settlements research links Federal Reserve QE and QT to shifts in corporate debt maturity with limited real-economy effects

The Bank for International Settlements published a working paper analysing how firms respond to the Federal Reserve’s quantitative easing (QE) and quantitative tightening (QT) across maturity segments. Using a new time series of maturity-specific central bank balance sheet shocks, the paper finds that, on average, firms adjust their debt maturity structure, reduce interest expenses and accumulate cash, while total debt, capital and employment remain largely unchanged; transmission primarily operates through corporate bond markets rather than bank lending. The shock series covers multiple QE and QT programmes between 2011 and 2024 and is constructed from surprises in Treasury purchases and reinvestments relative to market expectations, with shocks reaching around USD 50 billion per quarter (about 1–2% of government debt outstanding within a maturity segment). Firm-level analysis using S&P Global data for public and private non-financial firms in the United States and abroad shows heterogeneous effects by credit quality and targeted maturities: investment-grade firms’ medium- and long-term bond prices and issuance rise, with evidence of substitution away from term loans and a modest, persistent increase of about 2% in research and development spending after long-maturity Treasury purchase shocks. Non-investment-grade firms’ bond price responses are weak, and non-US investment-grade firms see positive spillovers in US dollar-denominated bond prices and quantities, alongside higher term loan drawdowns in response to long-maturity Treasury purchases.