Primary Market Corporate Credit Facility (PMCCF)

Demystifying the Primary Market Corporate Credit Facility (PMCCF)

Explore the intricacies of the PMCCF, a vital tool in maintaining credit flow to major employers during the COVID-19 crisis. Delve into its creation, operations, eligibility criteria, and impact on corporate financing.

Understanding the PMCCF: A Closer Look

Key Insights:

1. Origins and Objectives: Uncover the origins of the PMCCF as a special purpose vehicle (SPV) established by the Federal Reserve to support large employers amidst the economic turmoil triggered by the pandemic.
2. Operational Mechanisms: Learn how the PMCCF facilitated the purchase of corporate bonds and extension of loans, backed by funding from the U.S. Department of the Treasury's Exchange Stabilization Fund (ESF).

Navigating the Details of the PMCCF

Operational Framework:

1. Management and Oversight: Understand the role of the Federal Reserve Bank of New York (FRBNY) in managing the PMCCF and ensuring adherence to eligibility criteria and operational guidelines.
2. Eligibility Criteria: Explore the stringent eligibility requirements imposed on corporate bonds, including issuer location, credit ratings, and exclusion from federal financial assistance.

Key Features and Limitations of the PMCCF

Operational Considerations:

1. Interest Payment Flexibility: Examine the provisions allowing issuers to defer interest payments and exercise call options, subject to approval and commitment fees.
2. Ceasing Operations: Assess the implications of the PMCCF ceasing bond purchases and loan extensions after December 31, 2020, and the ongoing management of its assets by the New York Fed.