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The Debt Guarantee Program Of The Temporary Liquidity Guarantee Program (U.S. Gfc), Justin Katz
The Debt Guarantee Program Of The Temporary Liquidity Guarantee Program (U.S. Gfc), Justin Katz
Journal of Financial Crises
Following the collapse of Lehman Brothers in September of 2008, banks faced extreme difficulty in issuing new debt and finding affordable sources of funds due to heightened fears over counterparty solvency and liquidity risk. By the end of September, the TED spread had spiked to 464 basis points, and issuance of commercial paper fell 88%. On October 14th, to boost confidence and lower short-term financing costs, the Federal Deposit Insurance Corporation announced the Debt Guarantee Program (DGP) as part of the Temporary Liquidity Guarantee Program (TLGP). Under the DGP, the FDIC guaranteed in full a limited amount of senior unsecured …
The United Kingdom's Commercial Paper Facility (U.K. Gfc), Claire Simon
The United Kingdom's Commercial Paper Facility (U.K. Gfc), Claire Simon
Journal of Financial Crises
In January 2009, following continued increases in commercial paper spreads, Her Majesty’s Treasury authorized the Bank of England to begin purchasing commercial paper under the Asset Purchase Facility (APF) in order to maintain UK-based corporations’ access to short-term financing. Under the Commercial Paper Facility (CPF), the Bank purchased commercial paper from both primary issuers and secondary holders at a rate that was favorable to issuers during the credit crunch but that would no longer be attractive once the markets recovered. By serving as a backstop, or market maker of last resort (MMLR), the Bank helped to restore liquidity to corporate …
Japan's Special Funds-Supplying Operations (Japan Gfc), Alec Buchholtz
Japan's Special Funds-Supplying Operations (Japan Gfc), Alec Buchholtz
Journal of Financial Crises
Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several measures in late 2008 to make liquidity available to nonfinancial corporations that were strapped for cash. In December 2008, the BOJ implemented special funds-supplying operations in order to provide unlimited liquidity to banks and other financial institutions so they could continue to fund nonfinancial corporations. The BOJ would provide one- to three-month loans against an equal value of eligible corporate debt at a rate …
Japan's Outright Purchases Of Commercial Paper (Japan Gfc), Alec Buchholtz
Japan's Outright Purchases Of Commercial Paper (Japan Gfc), Alec Buchholtz
Journal of Financial Crises
Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several operations in late 2008 to promote liquidity in the CP market. In January 2009, the BOJ began to purchase CP and asset-backed CP outright from banks and other financial institutions. The BOJ could purchase up to ¥3 trillion of CP with a residual maturity of up to three months, among other short-term securities, via 10 purchases of up to ¥300 billion each. The BOJ …
The Money Market Investor Funding Facility (U.S. Gfc), Rosalind Z. Wiggins
The Money Market Investor Funding Facility (U.S. Gfc), Rosalind Z. Wiggins
Journal of Financial Crises
In mid-September 2008, money market mutual funds (MMMFs) began to experience run-like redemption requests after the Reserve Primary Fund “broke the buck.” As a result, MMMFs became reluctant to roll over or invest in commercial paper (CP) and faced the prospect of selling asset-backed commercial paper (ABCP) they held into a declining market to raise cash. The money markets quickly became negatively impacted, and on October 21, 2008, the Fed announced the Money Market Investor Funding Facility (MMIFF), which would loan funds to a series of special purpose vehicles (SPVs) established by the private sector. The SPVs would use the …
The Commercial Paper Funding Facility (U.S. Gfc), Rosalind Z. Wiggins
The Commercial Paper Funding Facility (U.S. Gfc), Rosalind Z. Wiggins
Journal of Financial Crises
In mid-September 2008, prime money market mutual funds (MMMFs) began experiencing run-like redemption requests sparked by one fund that had “broken the buck” because of large exposure to Lehman Brothers commercial paper (CP). As a result, MMMFs, which are significant investors in CP, became reluctant to hold CP. Within a week, outstanding CP had been reduced by roughly $300 billion. The CP market experienced severe shortening of maturities and increased rates, making it difficult for issuers to place new paper. When government efforts to assist the MMMFs did not resolve the stresses in the CP market, the Federal Reserve announced, …