Credit Easing versus Quantitative Easing: Evidence from Corporate and Government Bond Purchase Programs

Abstract Using security‐level data, we analyze the effects of UK corporate bond purchases (or credit easing, CE) and government bond purchases (or quantitative easing, QE) on corporate bond prices and issuance. Thus, we estimate CE's stock effects and its additional contribution relative to QE. We find that CE is more effective than QE in reducing credit spreads, especially for higher rated bonds, and in stimulating corporate bond issuance, which responds quite rapidly to corporate bond purchases. While QE pass‐through to corporate bond prices is significant and larger in the longer run than at announcement, it is often limited to the default‐free component of the corporate yield.