The Bank of England (BoE) is considering establishing a Secured Commercial Paper Facility (SCP) to buy appropriate ABCP as well as creating a specific Supply Chain Finance Facility.
The new proposal for the BoE to purchase certain high-quality ABCP potentially extends the reach of the banks program. As few existing ABCP programs will meet the BoEs criteria and it will take time for tailored programs to be developed. In time, however, additional credit can become available to a wider cross section of companies including those that by themselves would not warrant an investment grade credit rating. The hope is that the BoEs activity will stimulate other investors to buy this type of paper. Companies will need to ensure compliance with any existing covenants on secured finance and equivalents.