The Federal Reserve Bank of New York ("New York Fed") issued an additional series of FAQs concerning the Primary Market Corporate Credit Facility ("PMCCF") and the Secondary Market Corporate Credit Facility ("SMCCF"). The New York Fed noted that additional information is forthcoming, "including specific start dates of the facilities, issuer certification requirements and more detailed instructions, among other operational details."
As previously covered, the PMCCF and the SMCCF were established by the Federal Reserve Board ("FRB") to provide credit to large corporate employers. Specifically, the PMCCF was set up to invest in new bond offerings in order to provide a "funding backstop" for such corporate debt. The SMCCF was established to provide liquidity through secondary market purchases of outstanding corporate bonds or shares of exchange-traded funds ("ETFs").
In the new FAQ, the New York Fed addressed questions concerning the SMCCF purchase of ETFs and eligible corporate bonds once the PMCCF becomes operational. Specifically, the FAQs provided information on subjects including (i) issuer, seller, and asset eligibility, (ii) compliance with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, (iii) underwriting conditions for new bond issuances and loan syndications, and (iv) limits on the PMCCF and SMCCF.
Originally published May 05, 2020.
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