On April 9, 2020, the Federal Reserve released the term sheet for the Primary Market Corporate Credit Facility (PMCCF) to support the flow of credit to highly rated issuers with significant operations and a majority of its employees in the United States. On April 17, 2020, the Fed issued the first of a series of FAQs providing additional information on the PMCCF. The Board of Governors of the Federal Reserve System and the Secretary of the Treasury may adjust the terms and conditions of the term sheet published on April 9, 2020, comments and advocacy are ongoing, and additional rules and guidance will supplement the information released to date.
The Primary Market Corporate Credit Facility, and the Secondary Market Corporate Credit Facility (“SMCCF”) designed to purchase corporate bonds and corporate bond portfolios (ETFs), were created pursuant to Section 13(3) of the Federal Reserve Act. The PMCCF and the SMCCF (the “Facilities”) will be secured by a $75 billion Treasury equity investment and will have a combined size of up to $750 billion. Under the Facilities, the Federal Reserve will lend to a single purpose vehicle (“SPV”) on a recourse basis and will be secured by all assets of the SPV. The SPV in turn will purchase (1) new bond and loan issuances in the primary market and (2) outstanding corporate bonds and ETFs in the secondary market. Purchases will be made under the Facilities until September 30, 2020, unless the Facilities are extended, and the Fed will continue to fund the Facilities until the Facilities’ holdings either mature or are sold.
Foley’s multi-disciplinary teams are working together with our clients to navigate and access the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility and other COVID-19 related loan programs and relief, and to advocate for solutions to our clients’ business challenges. See Foley’s Federal Reserve Main Street Loan Programs client alert here.
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