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The source for all information on the: Term Asset-Backed Securities Loan Facility |
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Powered by: GLS |
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$1 Trillion available to fund eligible asset-backed securities |
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Home - The TALF Program
Maintained by Bob Judge, Partner, Government Loan Solutions, Inc. |
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The Fed has a webpage dedicated to the TALF. To view the page, follow this link: This website has been created in order to compile all information on the new Term Asset-Backed Securities Lending Facility, or TALF. It will be updated as new information is made available to the marketplace. Announced on November 25th, 2008, the TALF is intended to make credit available to consumers and small businesses on more favorable terms by facilitating the issuance of asset-backed securities (ABS) and improving the market conditions for eligible ABS. As currently conceived, The Federal Reserve Bank of New York will make up to $1 trillion of three-year, non-recourse loans that are secured by eligible ABS. The U.S. Treasury will provide $100 billion of credit protection to the Federal Reserve in connection with the TALF. In March, it was announced that the TALF will be expanded to finance certain distressed securities through the “Legacy Securities Program”. Basic terms & conditions of the TALF: 1. All US companies that own eligible collateral may borrow from the TALF, provided they maintain an account relationship with a TALF Agent. Foreign-owned US entities are also eligible, with certain restrictions. 2. Eligible collateral for a particular borrower must not be backed by loans or securities originated by the borrower or by an affiliate of the borrower. 3. An affiliate of a borrower means any company that controls, is controlled by, or is under common control with the borrower. Control is defined by a company that owns, controls, or holds with power to vote 25% or more of a class of voting securities and/or consolidates the company for financial reporting purposes. 4. TALF will provide three-year term, and for certain asset classes five-year term, non-recourse loans secured by eligible collateral. They will be pre-payable at the option of the borrower. 5. Starting in June 2009, up to $100 billion of TALF loans can have five-year maturities for CMBS, ABS backed by student loans and government guaranteed SBA pools. 6. Non-recourse financing means that the collateral is the sole security for the TALF-loan. If the borrower does not repay the loan, the Fed will take the collateral and sell it into a special purpose vehicle (SPV) designed o manage such assets. 7. TALF loans will not be subject to mark-to-market or re-margining requirements and any remittance of principal on collateral must be used to reduce the principal of the TALF loan. 8. Borrowers will be able to choose either a fixed or floating interest rate on TALF loans. There are some limitations on this election. 9. For non-government guaranteed ABS, the floating-rate TALF-loan will be 1% over the 1-month LIBOR and the fixed-rate will be 1% over the 1 to 3-year LIBOR swap rate. 10. For government guaranteed student loan securitizations, the spread over 1-month LIBOR is 50 basis points (.50%). There is no fixed rate being offered. 11. For private student loan securitizations, the spread over 1-month LIBOR is 1%. There also is no fixed rate being offered. 12. For SBA 7(a) pools, the floating rate is the Fed Funds target rate + 75 basis points (.75%). There is no fixed rate being offered. 13. For SBA 504 pools, the fixed rate is 3-year LIBOR swap rate + 50 basis points. There is no floating-rate being offered. 14. Newly issued ABS backed by commercial mortgage loans (CMBS) are TALF eligible as of June, 2009. CMBS subscriptions will take place in a separately scheduled operation from the other asset classes. 15. Legacy CMBS, or securities created prior to January, 2009, are eligible for 3 and 5 year TALF loans as of July, 2009. 16. For fixed-rate ABS that have weighted average lives to maturity (WALM) of less than two years, rates will be based on one– and two-year LIBOR swap rates. The TALF rates will be set at a spread of 100 basis points for each. 17. Interest rates will be set with a view to providing borrowers an incentive to purchase eligible ABS. They will be announced in advance of the monthly loan subscription date. 18. The Fed will impose “haircuts” (capital provided by the borrower) on each type of collateral, as well as a non-recourse fee. See the “Eligible Collateral” section for details. 19. The Fed will charge an administrative fee equal to 5 basis points on the loan amount. 20. TALF loans will be allocated on a fixed day each month. The minimum size for a TALF loan is $10 million. 21. The facility will cease to make new loans in March, 2010, except for CMBS, which end in June, 2010. |
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Disclaimer
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For up-to-date news regarding the TALF, please check the “TALF in the News” page |
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SITE UPDATES
1. “TALF in the News” updated as of 9/18/2009. 2. TALF extended until 3/2010, and CMBS through 6/2010. 3. GLS now offers a free SBA TALF Calculator. The link can be found on “SBA Pools” collateral page. 4. Fed releases new Terms & FAQ on 9/01/09. 5. TALF Results updated for August funding. 6. TALF Results and rates can be found on the “TALF Data” page. 7. New issue CMBS, SBA pools and student loan ABS are eligible for 5-year TALF loans, as of the June funding. 8. Haircuts, interest rate and prepayment rate details can be found on the “TALF Data” page.
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