CCFF update: companies without a credit rating
23 April 2020: the Bank of England has released further information for companies without a credit rating that want to access the Covid Corporate Financing Facility (CCFF).
Designed to bolster liquidity among larger firms, the scheme sets out to bridge coronavirus disruption to business cashflows through the purchase of short-term debt in the form of commercial paper.
As of 15 April, £8,244m had been advanced under the CCFF, but not all companies that may be eligible have accessed the scheme.
There are two further options for companies without a public investment-grade rating who want to sell commercial paper under the scheme.
The Bank of England invites anyone wanting to discuss the options to get in touch at CCFFeligibleissuers@bankofengland.co.uk.
The updated information can be found here. The additional options are for companies to:
1) Use banks’ internal ratings
Companies will generally have to have at least three investment-grade bank ratings and no speculative ratings as at 1 March 2020. If the company firm is viewed as “strongly investment grade” (BBB+, Baa1, BBB (High) or above) two ratings will be enough.
The company may have to submit confirmation of rating from the banks and attest that all ratings in relation to on-balance sheet borrowings have been disclosed.
2) Get an assessment of credit quality from a major credit rating agency
This is also possible if you are not considered investment grade based on banks’ internal ratings, so those should be pursued first. The assessment needs to be as at 1 March 2020 and noted to be for the purpose of using the CCFF. The largest ratings agencies are set up to issue these assessments, and the Bank of England has listed products which will give suitable evidence on their website.
For the latest news and guidance on the ongoing impact of COVID-19 for businesses and accountants, visit ICAEW’s dedicated coronavirus hub.