search.noResults

search.searching

dataCollection.invalidEmail
note.createNoteMessage

search.noResults

search.searching

orderForm.title

orderForm.productCode
orderForm.description
orderForm.quantity
orderForm.itemPrice
orderForm.price
orderForm.totalPrice
orderForm.deliveryDetails.billingAddress
orderForm.deliveryDetails.deliveryAddress
orderForm.noItems
CHAMBER NEWS


Covid-19 – financial support for businesses from Government and the Bank of England


Although the full magnitude of the economic shock from Covid-19 is uncertain, activity will continue to weaken materially in the UK over the coming months. Temporary, but significant, disruptions to supply chains and weaker activity will challenge cashflow and increase demand for working capital from companies. The Covid Corporate Financing


Facility (CCFF) will provide funding to businesses by purchasing commercial paper of up to one- year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows. The facility will offer financing on


terms comparable to those prevailing in markets in the period before the Covid-19 economic shock, and open to firms that can demonstrate they were in sound financial health prior to the shock. The facility will look through temporary impacts on firms’ balance sheets and cash flows by basing eligibility on firms’ credit ratings prior to the Covid-19 shock. Businesses do not need to have previously issued commercial paper in order to participate. The scheme will operate for at


least 12 months and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy. The Bank will implement the facility on behalf of HM Treasury.


ELIGIBLE ISSUERS The Fund will purchase CP issued by companies (including their finance subsidiaries) that make a material contribution to economic activity in the UK. UK incorporated companies, including those with foreign- incorporated parents and with a genuine business in the UK, will normally be regarded as meeting


48 business network April 2020


this requirement. Companies with significant employment in the UK or with headquarters in the UK will normally be regarded as meeting this requirement. Considerations will be made as to whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK.


‘The facility will offer financing on terms comparable to those prevailing in markets in the period before the Covid-19 economic shock’


CP issued by non-bank financial


companies will in principle be eligible, subject to the Bank being satisfied that the issuer makes a material contribution to corporate financing in the UK. CP issued by leveraged investment vehicles, or from companies within groups that are predominantly banks, investment banks or building societies, will not be eligible. Companies that do not currently


issue CP but are capable of doing so will in principle be eligible to utilise the CP Facility, provided they meet the eligible securities criteria. The Bank will require issuers


whose CP will be offered to the Fund in the primary market to contact the Bank directly at applications@bankofengland.co.uk.


ELIGIBLE SECURITIES The Fund will be operated by the Bank under an agreement with HM Treasury. The Fund will purchase the sterling-denominated CP of eligible issuers, with the following characteristics: • A maturity of one week to 12 months if issued to the Bank at issue via a dealer. Drawings can be rolled while the CCFF is open, subject to eligibility.


• Where available, a minimum short-term credit rating of A-3 / P-3 / F-3 from at least one of Standard & Poor’s, Moody’s and Fitch, as at 1 March 2020. This reference point is set prior to the possible impact of Covid-19 on firms’ short-term credit ratings. Issuers with split ratings where one or more rating is below the minimum are not eligible. The Bank and HMT will consider the eligibly of issuers at the lowest rating that were on negative watch or negative outlook as at 1 March.


• Where a short-term credit rating is not available the Bank will consider whether a long-term credit rating can be used to assess eligibility and pricing, or whether the Bank can assess that the issuer is of equivalent financial strength.


• Issued directly into Euroclear and/or Clearstream.


If an issuer is downgraded after 1 March 2020 below the minimum credit ratings, the issuer will remain eligible for primary and secondary market purchase in the Facility, subject to HM Treasury approval. The Bank may not approve as


eligible any CP which has certain non-standard features. Securities issued by a finance subsidiary should be guaranteed by their parent company in a form acceptable to the Bank. Eligible counterparties that wish


to offer CP to the Bank in the secondary market must confirm eligibility of specific securities prior to offering them for sale. Eligible counterparties should contact the Bank at applications@bankofengland.co.uk. When the Bank confirms


eligibility before 4pm, securities will be eligible for sale to the Fund from the following business day. The Bank, the Fund and HM


Treasury reserves the right to deem


any security ineligible for any reason, and to deem ineligible securities it has previously purchased and vice versa.


LIMITS ON THE BANK’S HOLDINGS Purchases of CP in the primary markets may be limited by issuer. Any such limits applying to individual issuers will be made available, on request, to the issuer only. Where two or more issuers are part of the same Group, an aggregate limit may be applied.


ELIGIBLE COUNTERPARTIES The Fund will purchase CP that meets the eligible securities criteria and that has been in the primary market from dealers acting as principal and will also purchase CP in the secondary market from eligible institutions. Counterparties must, inter alia, be appropriately authorised for the purposes of the Financial Services and Markets Act 2000 (FSMA).


PRICES The Fund will purchase securities at a spread above a reference rate, based on the current sterling overnight index swap (OIS) curve. Spreads will be set such that pricing is close to the market spreads prevailing before the economic shock from Covid-19. The Bank will keep its pricing under review. CP purchased in the primary


market will be discounted using a rate based on the maturity- matched overnight index swap (OIS) rate, as determined by the Bank on day of purchase. Money


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96