On May 12, 2020, the Federal Reserve Bank of New York (the "Fed") issued new Frequently Asked Questions and a revised term sheet in connection with the Term Asset-Backed Securities Loan Facility ("TALF 2020"). This Legal Update summarizes the FAQs and the revised term sheet, highlighting key changes and noting where further information or materials may be forthcoming from the Fed.
Key Highlights:
- The revised term sheet and FAQs clarified that investment funds may be eligible borrowers;
- The Fed will provide monthly public disclosures identifying TALF borrowers, their "Material Investors" (i.e., any direct or indirect owner of 10% or more of any outstanding class of securities of such borrowers), amounts borrowed, interest rates and other information;
- TALF borrowers must certify that they are unable to secure adequate credit accommodations from other banking institutions;
- No new asset classes have been added; the FAQs include detailed requirements for CLOs, CMBS and other eligible assets;
- Only S&P, Moody's and Fitch are eligible rating agencies under TALF 2020;
- Collateral review, issuer certifications, auditor assurances and SBA loan documentation have not yet been detailed; and
- The operational starting date for TALF 2020 has not yet been announced, and a form of the Master Loan and Security Agreement has not been provided.
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