Featured Product

    BoE Updates Process for Credit Quality Review of CCFF Issuers

    October 09, 2020

    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
    Related Articles

    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.

    March 13, 2023 WebPage Regulatory News

    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.

    March 12, 2023 WebPage Regulatory News

    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.

    March 03, 2023 WebPage Regulatory News

    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.

    March 02, 2023 WebPage Regulatory News

    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.

    February 28, 2023 WebPage Regulatory News

    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.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793