BoE Updates Process for Credit Quality Review of CCFF Issuers
BoE published a Market Notice that provides an update on how credit quality of COVID Corporate Financing Facility (CCFF) issuers will be monitored and reviewed in advance of the closure of the CCFF. With effect from October 09, 2020, the process to review the credit quality of eligible issuers in the CCFF will be enhanced. Any eligible issuer wanting to issue new commercial paper into the CCFF after that date will be subject to a review to consider whether that issuance remains in line with the purpose of the facility. In addition to the enhanced review process, from October 09, any firm whose long-term credit rating falls to, or below, BBB-/Baa3/BBB (low) or equivalent after March 01, 2020 will have their aggregate drawing limit capped at a maximum of GBP 300 million. This will not affect outstanding drawings if already in excess of GBP 300 million.
In case an issuer wanting to issue commercial paper into the CCFF after October 09 has a current credit rating (or equivalent) of investment grade, it can expect to be able to proceed to issue commercial paper into the CCFF, subject to providing certain supporting evidence and the issuer’s approved drawing limit. In cases where an issuer’s credit rating (or equivalent) has fallen below the levels deemed equivalent to investment grade, the issuer will have the option to pursue a review on which HM Treasury, as the ultimate risk-owner of the CCFF, will take the final decision. The review will consider whether the issuer’s use of the CCFF remains within the purpose of the facility, which has always been to provide short-term liquidity support to fundamentally strong businesses.
To support the revised credit quality requirements, eligible issuers should notify BoE of their intention to sell new commercial paper into the CCFF no later than five business days prior to their requested sale date. The notification should include the issuer’s recent credit rating or equivalent evidence of investment-grade credit quality, to a comparable standard to the evidence submitted to establish initial eligibility for the CCFF. As part of any review, supporting information will be requested from issuers. The review should be expected to take at least four weeks to complete, which may mean that issuance cannot take place on the issuer’s requested date. In light of the changes to the CCFF outlined in this Market Notice, where appropriate, HM Treasury may, in its sole discretion, allow an issuer to issue new commercial paper into the CCFF while the review process is undertaken. This will be decided on a case-by-case basis on request by the issuer.
The CCFF, which was launched in March 2020, has helped eligible businesses bridge COVID-19-related temporary disruption to their cash flows. Consistent with the reduction in CCFF usage in recent months, on September 22, 2020, BoE and HM Treasury confirmed that the CCFF will close for new purchases of commercial paper with effect from March 23, 2021. As announced on September 22, new applications to participate in the CCFF will be accepted until December 31, 2020, subject to the enhanced credit quality review process.
Related Link: Market Notice
Keywords: Europe, UK, Banking, COVID-19, CCFF, Credit Risk, Credit Ratings, HM Treasury, BoE
Featured Experts

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
EBA Sets Out Work Priorities and Deliverables for 2021Related Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.