Following on the Federal Reserve Board's recent announcement of the Commercial Paper Funding Facility (CPFF), the Federal Reserve Bank of New York has released a set of Frequently Asked Questions to address programmatic inquiries about the facility.
The CPFF was established to enhance the liquidity of the commercial paper market by increasing the availability of term commercial paper funding to issuers and by providing greater assurance to both issuers and investors that firms and municipalities will be able to roll over their maturing commercial paper.
It provides a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV) that will purchase eligible three-month unsecured and asset-backed commercial paper from eligible issuers using financing provided by the New York Fed. The SPV will hold the commercial paper until maturity and will use the proceeds from maturing commercial paper and other assets of the SPV to repay its loan from the New York Fed.
Additional information about the CPFF will be posted to the New York Fed’s webpage about the facility as it becomes available.
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