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A Guide To The Covid Corporate Financing Facility (CCFF)

Posted 6 days ago

A Guide To The Covid Corporate Financing Facility (CCFF)
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At Nextin we have focused intensely on the range of measures designed to support small businesses. But the government has a number of schemes designed to protect medium and large businesses. One such example is the Covid Corporate Financing Facility (CCFF).  

What is the CCFF?

In short, the CCFF is a lending facility that is jointly run by the Bank of England and the Treasury. Issuing short-term liquidity, the Facility helps to bridge disruptions to the cash flows of non-financial firms that are deemed as having made a material contribution to the UK economy. Under the CCFF, Covid Corporate Financing Facility Limited provides funding to qualifying businesses by purchasing what is called their commercial paper of up to one-year maturity. 

What is commercial paper?

A short-term form of debt instrument with the following features:

  • Sterling-denominated
  • A maturity of one week to twelve months
  • Issued directly into international securities settlement systems such as Euroclear and/or Clearstream.

Who is eligible under the CCFF?

The CCFF came into operation on March 23 of this year, and the eligibility conditions were later updated on May 19. Under the Facility, companies, and any of their finance subsidiaries, that make a material contribution to the UK economy are eligible to take part in the CCFF. Qualifying firms will usually be:

  • Companies that are incorporated, including those with foreign-incorporated parent companies with genuine business interests in the UK;
  • Companies that employ significant numbers in the UK; or
  • Firms with headquarters in the UK.

The CCFF is open to firms that can demonstrate they were in financial health prior to the pandemic, namely, companies that had a short or long-term rating of investment grade. This can resemble a short-term rating of A3/P3/F3/R3 or above, or a long-term rating of BBB-/Baa3/BBB-/BBB low or above by at least one of the major credit ratings agencies

What role do banks play in the CCFF?

Under the CCFF, banks are expected to play the following roles:

  • Prospective participants are directed to contact their bank to confirm their eligibility and, if required, help establish a CP programme (with the assistance of lawyers).  The role of the advising bank will be key where the prospective participant does not have an existing rating and may need to use an alternative method. 
  • Issue and sale of commercial paper: The issuance and sale of commercial paper must be arranged through a dealer bank which is a participant in the CCFF.

How do you apply for the CCFF?

Qualifying companies should reach out to its bank when applying to participate. Once having spoken to its bank, the company will need to fill out the following paperwork:

  • Issuer Eligibility Form 
  • Issuer Undertaking and Confidentiality Agreement
  • Proforma guarantee
  • Form of legal opinion in connection with guarantee 

For more information on the CCFF, visit the Bank of England’s dedicated page. 

Author: Sacha Bright & Oliver Murphy

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site. 

Tagged: Raising funds entrepreneur coronavirus business guides business support



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