The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The Outreach & Education function engages, empowers and educates the public in the Second District. Our outreach mission furthers the Bank’s commitment to the region by listening to the communities we serve and developing programs, analysis and sponsored conferences and clinics to help meet their needs. Our education mission aims to advance public knowledge about the Federal Reserve System and its role in the economy.
Commercial Paper Funding Facility: Program Terms and Conditions1
Effective June 25, 2009
The CPFF will be structured as a credit facility to a special purpose vehicle
(SPV) authorized under section 13(3) of the Federal Reserve Act. The SPV will
serve as a funding backstop to facilitate the issuance of term commercial paper
by eligible issuers.
The Federal Reserve Bank of New York will commit to lend to the SPV on a
recourse basis. The New York Fed will be secured by all the assets of the SPV.
Assets of the SPV
The SPV will purchase from eligible issuers three-month U.S. dollar-denominated
commercial paper through the New York Fed’s primary dealers. Eligible
issuers are U.S. issuers of commercial paper, including U.S. issuers with a
foreign parent company.
The SPV will only purchase U.S. dollar-denominated commercial paper (including
asset-backed commercial paper (ABCP)) that is rated at least A-1/P-1/F1 by
a major nationally recognized statistical rating organization (NRSRO) and,
if rated by multiple major NRSROs, is rated at least A-1/P-1/F1 by two or more
The SPV will not purchase ABCP from issuers that were inactive
prior to the creation of the CPFF. An issuer will be deemed inactive
if it did not issue ABCP to institutions other than the sponsoring institution
for any consecutive period of three-months or longer between January 1 and
August 31, 2008.
Limits per issuer
The maximum amount of a single issuer’s commercial paper the SPV may
own at any time will be the greatest amount of U.S. dollar-denominated commercial
paper the issuer had outstanding on any day between January 1 and August 31,
2008. The SPV will not purchase additional commercial paper from an issuer
whose total commercial paper outstanding to all investors (including the SPV)
equals or exceeds the issuer’s limit.
Pricing will be based on the then-current 3-month overnight index swap (OIS)
rate plus fixed spreads.
Rates and Fees (per annum)
Unsecured Commercial Paper
Asset-Backed Commercial Paper
3-month OIS + 100 basis points
3-month OIS + 300 basis points
Unsecured Credit Surcharge2
100 basis points
At the time of its registration to use the CPFF, each issuer must pay a facility
fee equal to 10 basis points of the maximum amount of its commercial paper
the SPV may own.
The SPV will cease purchasing commercial paper on February 1, 2010, unless the
Board extends the facility. The New York Fed will continue to fund the SPV
after such date until the SPV’s underlying assets mature.
1The Federal Reserve reserves
the right to review and make adjustments to these terms and conditions,
including pricing and eligibility requirements.
2The unsecured credit surcharge will take the form of a 100 basis point per
annum fee paid up front on each sale of commercial paper to the SPV. An issuer
may avoid the unsecured credit surcharge if the issuer provides a collateral
arrangement for the commercial paper that is acceptable to the New York Fed
or obtains an indorsement or guarantee of its obligations on the commercial
paper that is acceptable to the New York Fed.