covid-19 corporate financing Facility (CCFF)

THE HEADLINES​THE ANNOUNCEMENT
At the Budget 2020, the Chancellor announced a number measures to support businesses and people through the Covid-19 outbreak.

Two flagship schemes were announced as part of these measures, the Covid-19 Business Interruption Loan Scheme (CBILS) and the Covid-19 Corporate Financing Facility (CCFF).

Of the two schemes CBILs is aimed a SMEs with a maximum turnover of £45 million (and we recommend SMEs look at this scheme), whereas the CCFF scheme is aimed at larger companies, with a minimum loan of £1 million and requires an investment grade rating or equivalent. ​

Under the CCFF scheme, the Bank of England will buy short term debt in the form of commercial paper, from larger companies. This will support companies that have been affected by a short-term funding squeeze, and allow them to finance its short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.

ELIGIBILITYKEY FACTS
Larger companies require an investment grade rating or equivalent, and the Bank of England has confirmed that it will accept; 

• Internal bank ratings equivalent to investment grade provide they were consistently held across all the business's commercial bank counterparties as at 1 March 2020; or
• An assessment of credit quality in the approved form from one of the four approved credit rating agencies.
• For the avoidance of doubt there is no requirement to have previously issued commercial paper
• Companies must also make a "material contribution" to the UK economy

WHENLaunched 23 March 2020 ​

​WHAT IS COMMERCIAL PAPER?For many the first question may be what is commercial paper?
It is commercial paper is an unsecured, short-term debt instrument issued by a company.

Commercial paper the Facility will purchase
The Facility will purchase sterling-denominated commercial paper, with the following characteristics:

• Maturity of 1 week to 12 months
• Issued directly into Euroclear and/or Clearstream
• Where available, a credit rating of A-3 / P-3 / F-3 / R3 from at least one of Standard Poor's, Moody's, Fitch and DBRS Morningstar as at 1 March 2020.
• Rating agencies can provide private indicative ratings specifically for accessing CCFF.
• In the absence of a rating, the Bank will take into account instances where a company's lenders consider the company to be equivalent to investment grade.

​FURTHER INFORMATIONDetailed guidance on the Facility can be found on the Bank of England website which can be viewed at https://www.bankof england.co.uk/news/2020/march/the-covid-corporate-financing-facility >
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