Primary Market Corporate Credit Facility (PMCCF): Overview
Fed’s PMCCF Program: Emergency Credit Lifeline for Corporations
The Primary Market Corporate Credit Facility (PMCCF) was launched by the Federal Reserve on March 23, 2020 to keep credit flowing to large U.S. employers during the COVID-19 crisis. The Fed funded a special purpose vehicle (SPV) that issued four-year loans and purchased investment-grade corporate bonds, allowing companies to defer payments for six months. The goal: prevent mass layoffs and stabilize the economy during the downturn.
On April 9, 2020, the program expanded to include lower-rated bonds, while a companion initiative the Secondary Market Corporate Credit Facility (SMCCF) boosted liquidity by purchasing existing corporate debt. Together, the Fed injected $750 billion into credit markets to support business continuity.
By November 2020, Treasury Secretary Steven Mnuchin announced the PMCCF would not be extended beyond December 31, 2020. The program officially stopped buying new bonds at year-end, marking the close of one of the Fed’s most aggressive corporate support efforts.
- To support large employers during the pandemic, the Federal Reserve launched the Primary Market Corporate Credit Facility (PMCCF).
- The Fed funded the PMCCF, which extended loans and purchased corporate bonds from eligible companies.
- This emergency credit helped businesses stay afloat and retain employees during the economic downturn.
- The program was expanded on April 9, 2020 to include lower-rated bonds and ended on December 31, 2020.
Key Takeaways
PMCCF Breakdown: Fed’s Corporate Credit Backstop During COVID-19
The Primary Market Corporate Credit Facility (PMCCF) was a special purpose vehicle (SPV) launched by the Federal Reserve to support corporate credit markets during the pandemic. Backed by $50 billion from the U.S. Treasury’s Exchange Stabilization Fund (ESF), the PMCCF extended loans and purchased investment-grade corporate bonds, which served as collateral for Fed lending.
Managed by the Federal Reserve Bank of New York, the facility operated on a recourse basis. Eligible bonds had to be issued by U.S.-based companies with substantial domestic operations and no expectation of direct federal aid.
To qualify, bonds needed a BBB-/Baa3 rating or higher from one major NRSRO, or two if rated by multiple agencies, as of March 22, 2020. If downgraded after that date, they still had to meet the dual-rating threshold.
The PMCCF capped exposure to any issuer at 130% of their highest outstanding debt between March 22, 2019 and March 22, 2020. It excluded firms receiving CARES Act support, those failing conflict-of-interest rules, and depository institutions under the Dodd-Frank Act.
With Fed approval, issuers could defer interest payments, rolling them into principal. They also retained the right to call bonds or loans at par. A 100 basis point commitment fee applied, and pricing was tied to Treasury yield spreads, adjusted by credit rating.
The PMCCF ceased new purchases and lending on December 31, 2020, but the New York Fed continues to fund the SPV until its assets mature.
