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- Fed to establish commercial paper lending facility to support the flow of credit to businesses
Fed to establish commercial paper lending facility to support the flow of credit to businesses
Fed announces the establishment of a Commercial Paper Funding Facility (CPFF) "to support the flow of credit to households and businesses".
- CPFF will provide liquidity backstop to U.S. issuers of commercial paper
- CPFF program is established by Fed under the authority of Section 13(3) of the Federal Reserve Act, with approval of U.S. Treasury Secretary
- U.S. Treasury will provide $10 billion of credit protection to Fed in connection with CPFF
- Pricing will be based on the then-current 3-month overnight index swap (OIS) rate plus 200 basis points
- Fed notes that commercial paper market has been under considerable strain in recent days as businesses and households face greater uncertainty in light of the coronavirus outbreak
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