The Bank of England gave further details of its emergency Covid financing facility yesterday afternoon. It will be available for at least 12 months via CCFF Limited, presumably a BOE subsidiary. The full T&Cs will be made available on Monday 23 March when the scheme opens.
Eligible issuers: firms making a material contribution to economic activity in the UK. UK companies or those with significant UK employment or a UK HQ will “normally” be eligible issuers. The BOE “risk management staff” will determine eligibility in each case. Non-bank financial companies are in principle included, but not leveraged investment vehicles or companies within groups that are predominantly banks, investment banks or building societies. They must have a short term rating of A-3/P-3/F-3 or better, as at 1 March 2020. If they did not have a short term rating then, the BOE may reference their long term rating. The names of issuers will be kept confidential.
Eligible CP will be denominated in GBP, with a tenor of 1-12 weeks, and in standard form (e.g. not subordinated).
Pricing will be over OIS at spreads prevailing prior to the start of the crisis – presumably as of 1 March (which would tie in with the applicable date for the rating).
Operation: the BOE will buy eligible CP from dealers, with a minimum lot size GBP1 million and then GBP100,000 increments. Eligible issuers with no existing ECP facility will want to put one in place (and they will have to as the CP will be issued directly into Euroclear or Clearstream).
Usage stats will be published each Thursday.
and then 