LONDON (Reuters) – The Bank of England said on Friday that it was tightening lending rules on a 20 billion pound ($26 billion) programme for large companies which had investment-grade credit ratings before the COVID pandemic.
The Covid Corporate Financing Facility (CCFF), launched in March, bought sterling commercial paper – a form of short-term debt – from companies which had top-notch credit quality before the crisis but faced trouble raising money during a period of market turbulence six months ago.
Lending under the programme peaked at 20.5 billion pounds in May, and has now fallen to 15.8 billion pounds.
The CCFF will close in March 2021, and the BoE said that now financial markets were calmer, it wanted to ensure any companies still borrowing from the fund were using it appropriately.
“Any eligible issuer wanting to issue new CP into the CCFF … will be subject to a review to consider whether that issuance remains in line with the purpose of the facility,” it said.
Businesses whose credit rating is no longer investment grade will also have to seek specific approval from Britain’s finance ministry, will be limited to selling a maximum of 300 million pounds of commercial paper to the BoE.
Existing commercial paper that has already been sold to the BoE is not affected.
($1 = 0.7686 pounds)
Reporting by David Milliken. Editing by Andrew MacAskill