In the Main Street Lending Facility, eligible borrowers can have
up to 10,000 employees or up to $2.5 billion in revenue.
By Christopher Condon, Rich Miller and
Craig Torres | April 09, 2020 at 09:36 AM
The Federal Reserve on Thursday announced
another series of sweeping steps to provide as much as $2.3 trillion in
additional aid during the coronavirus pandemic, including starting programs to
aid small and mid-sized businesses as well as state and local governments.
“Our country’s highest priority must be to
address this public health crisis, providing care for the ill and limiting the
further spread of the virus,” Fed Chair Jerome Powell said in a statement. “The
Fed’s role is to provide as much relief and stability as we can during this
period of constrained economic activity, and our actions today will help ensure
that the eventual recovery is as vigorous as possible.”
Powell is scheduled to speak at 10 a.m. New
York time in a webinar hosted by the Brookings Institution.
Key Highlights
·
A Municipal Liquidity
Facility will offer as much as $500 billion in lending to states and
municipalities, by directly purchasing that amount of short-term notes from
states as well as large counties and cities
·
The Main
Street Lending Program will “ensure credit flows to small and mid-sized
businesses with the purchase of up to $600 billion in loans”
·
Expanding the size and
scope of the Primary and Secondary Market Corporate Credit Facilities and the
Term Asset-Backed Securities Loan Facility to support as much as $850 billion
in credit
·
Starting the Paycheck
Protection Program Liquidity Facility, “supplying liquidity to participating
financial institutions through term financing backed by PPP loans to small
businesses”
Data released at the same time Friday showed that Americans applied for unemployment benefits
in massive numbers for a third straight week, bringing the three-week total to
almost 17 million during the virus shutdown.
The Bloomberg dollar index dropped while U.S.
stock futures and Treasury yields pared their declines after the simultaneous
announcement of the Fed’s new facilities and jobless claims data.
The Fed laid out details of the heavily
anticipated Main Street Lending Facility, which will deliver funding
to companies much bigger than those yet eligible for help. Eligible borrowers
can have up to 10,000 employees or up to $2.5 billion in
annual revenue. Loan sizes will range from $1 million to $150 million.
Borrowers will be subject to restrictions
imposed by Congress in the CARES Act on employee retention, distribution of
dividends and other factors. The program will be backstopped by $75 billion
from the Treasury to absorb losses. Banks that handle the loans will be
required to retain a 5% interest in each loan, with the facility purchasing the
remainder.
The Fed also said it will continue to closely
monitor conditions in the primary and secondary markets for municipal
securities and will evaluate whether additional measures are needed to support
the flow of credit and liquidity to state and local governments.
Copyright 2020 Bloomberg. All rights reserved.
This material may not be published, broadcast, rewritten, or redistributed.
No comments:
Post a Comment