This article was originally published 5 March, 2009
On March 3, 2009, the Federal Reserve Board released the final terms and conditions applicable to the initial loan subscription, including loan rates and collateral haircuts, relating to its previously announced Term Asset-Backed Securities Loan Facility (TALF). Under the TALF, the Federal Reserve Bank of New York (FRBNY) initially announced that it would make up to $200 billion of non-recourse loans available to eligible borrowers to enable them to purchase certain asset-backed securities (ABS). The Federal Reserve Board subsequently announced that TALF may provide up to $1 trillion of loans to eligible borrowers and, in connection with the increased size of the facility, may include additional types of ABS as eligible collateral for TALF loans. Hedge funds, private equity funds, mutual funds and other investment vehicles may borrow under the TALF so long as they satisfy the borrower eligibility requirements. The FRBNY announced that the first loan subscription date will be March 17, 2009 and the first loan settlement date will be March 25, 2009. The FRBNY also announced that the loan subscription date for the second funding under the TALF will be April 7, 2009 with a loan settlement date of April 14, 2009. This update summarizes the significant additional terms and conditions (and changes to previously announced terms and conditions) of the TALF that were announced by the FRBNY in connection with the initial loan subscription. These terms and conditions will apply to the initial loan subscription and are expected to apply to subsequent loan subscriptions, although the FRBNY has reserved the right to unilaterally change the terms of the TALF applicable to any particular loan subscription at any time prior to that loan subscription.
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