Light shines on liquidity facilities

Liquidity facilities have come out of the shadows, and many are surprised by what they really look like.

The structure of liquidity facilities that are used to cover asset-backed commercial paper issues has been brought to the fore over the past few months as more and more issuers are finding it very difficult to fund their ABCP programmes. Until recently, it had always been assumed that liquidity facilities would not need to be drawn upon, and consequently they were seen as more of a backstop than as a priority component of commercial paper issuance.

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