AFP sent comment letters to the Federal Reserve Board and the Department of the Treasury, requesting that the newly established Commercial Paper Funding Facility (CPFF) and the Money Market Mutual Fund Liquidity Facility (MMLF) be expanded to include Tier 2 CP issuers.

The Tier 2 CP market is approximately $90 billion in size and includes many public utilities and other critical industries. At present, market is largely frozen, with rates at two to three times their historical average. As a result, high-quality issuers will draw on their credit lines as an alternative source of liquidity, putting increased pressure on banks to find funding. By expanding the CPFF, the demand for bank credit on the part of Tier 2 issuers should decrease. Similarly, expanding the eligible collateral under the MMLF to include Tier 2 CP will help to restore demand and normalize rates on this high-quality paper.

Read AFP's comment letter to the Federal Reserve Board here.

Read AFP's comment letter to the Treasury Department here.

Read the press release here.

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