Covid Corporate Financing Facility (“CCFF”): supporting liquidity in larger firms

26 Mar 2020

The Bank of England’s scheme to help larger companies to bridge COVID-19 related cash flow disruption is now open for business.  Jonathan Compton looks at the headlines and some of the detail of this new funding facility for firms across a range of sectors to enable them to pay wages and suppliers.

The guts of the scheme permits financing of companies to support them through the current crisis based on the issue of ‘commercial paper’, ie. an unsecured, short-term debt instrument issued by corporate bodies.

The headlines

  • CCFF is open to larger commercial bodies making a major contribution to UK PLC. 
  • Those corporates issuing can take part notwithstanding they have not issued commercial paper before. 
  • The commercial paper needs to fulfil certain criteria:
    • It must be issued directly into clearing houses (Clearstream and/or Euroclear).
    • And be denominated in GBP.
    • Maturity dates between seven days and one calendar year
    • Eligibility will be based on the firm’s previous credit rating and Issuers will need to have a minimum short term credit rating of A-3 / P-3 / F-3 from at least one of the major agencies such as S&P, Fitch or Moody’s  ie. investment grade (or minimum BBB).
    • Have standard features. No extendibility or ranking (subordination).
  • The scheme is confidential. 
  • Pricing: standard spread in relation to a reference rate and set against the credit rating of the company concerned.
  • There is a £1million minimum loan amount. 

A little more focus

The scheme works by purchasing commercial paper from larger UK registered corporates.

Participants must be in ‘sound financial health’ and credit worthy – as detailed above.

There is no requirement for participants to have issued commercial paper before. Applications will be vetted by the Bank of England’s risk management people.

There is no reason other than practicality why the scheme could not be extended to smaller or non-investment grade companies, although there is a limit to how many applications Bank of England staff can undertake.  Smaller corporates have the opportunity to apply for the alternative Coronavirus Business Interruption Loan Scheme (“CBILS”) available through more than 40 accredited bank lenders.  See our blog on CBILS here.

Companies at the lower credit ratings or on negatives (either watch or outlook) or those that don’t have an existing rating from one of the major agencies should speak to their own bank in the first instance.  If that bank’s advice is that the company was viewed internally as equivalent to investment grade at 1 March 2020, then they should contact the Bank of England to discuss eligibility.

The scheme will be open for an initial period of 12 months, and the Bank of England will give a six-month withdrawal notice.  However, we expect that the scheme will, in time, be extended, should events warrant.

It should always be remembered that this is a loan facility, it is not a grant, and businesses must be able to afford to repay what is essentially additional debt.  Issuing commercial paper also involves arranger fees, which might be prohibitive for some businesses.

However, as one of a raft of measures to support UK companies through the pandemic and its effects on the global economy, the scheme is a welcome one.

Further reading

IP in pole position in 2021

Victoria Watt takes a look at a hat trick of car-related cases that concluded last autumn that place IP firmly in the headlights
Read more Read

Happy New Year for leasehold property owners

Blog, Legal Updates
Lawrence Morley looks at government reforms that will make it easier and cheaper for leaseholders to buy  their homes
Read more Read

Mission accomplished! DMH Stallard completes charity trek to and from the North Pole in aid of St Catherine’s Hospice

Blog, News & PR
DMH Stallard completes Christmas charity trek from the North Pole to St Catherine's and back, raising money for a fantastic cause.
Read more Read

(Supply) chain reaction

Blog, News & PR
It’s no time to shy away from chasing debt when it’s your cashflow under pressure. Kelly Mills provides the focus.
Read more Read
  • Brighton Office

    1 Jubilee Street


    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street


    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road



    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax


    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane


    EC4A 3BF

  • Get in touch