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ARTICLE · 08 MAY 2020

Term Asset-Backed Securities Loan Facility

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On April 9, 2020, the Federal Reserve issued an updated term sheet for the Term Asset-Backed Securities Loan Facility ("TALF").

United StatesFinance and Banking
Colleen H. McDonald
Colleen H. McDonald
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On April 9, 2020, the Federal Reserve issued an updated term sheet for the Term Asset-Backed Securities Loan Facility ("TALF"). Under TALF, the Federal Reserve will make an equity investment of $10 billion in a special purpose vehicle ("SPV") that will in turn make up to $100 billion of non-recourse loans fully secured by eligible ABS.

The stated purpose in establishing TALF is to help meet the credit needs of American consumers and businesses by facilitating the issuance of asset-backed securities. Highlights of the changes to the 3/23/20 draft of the TALF term sheet include (i) the addition of highly rated newly issued collateralized loan obligations ("CLOs") and legacy commercial mortgage-backed securities ("CMBS") as eligible collateral, and (ii) providing pricing information (see summary below) and the schedule of "haircuts" for valuing various ABS collateral.

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