TALF 2020 Update: MLSA Revised FAQs and Related Program Materials

On May 20, 2020, the Federal Reserve Bank of New York (“FRBNY” or the “Fed”) announced the first subscription date, June 17, 2020, in connection with the Term Asset-Backed Securities Loan Facility (“TALF 2020”). The Fed also issued revised Frequently Asked Questions (“FAQs”) and the new Master Loan and Security Agreement (“MLSA”) for the program, along with other updated forms and documents. On May 26, 2020, the Fed again released revised FAQs and a revised issuer/sponsor certification, as further discussed below.

This Legal Update replaces our prior Legal Update published May 18, 2020, and provides a comprehensive summary of the current FAQs, MLSA and related TALF 2020 materials released to date. 

Key Highlights in Recent Fed Releases

• The first TALF loan subscription date will be June 17, 2020, with a settlement date of June 25, 2020;
• Going forward, the Fed expects to provide two subscription dates per month, each available to all eligible asset classes;
• Eligible NRSROs have been expanded to include DBRS and Kroll, as long as at least one qualifying rating is received from S&P, Moody's or Fitch;
• The forms for TALF borrower certifications as to inadequate credit accommodations, solvency and conflicts of interest have been provided on the TALF website, with further guidance in the FAQs;
• Details on collateral review, issuer/sponsor certifications, auditor assurances and SBA loan documentation have been provided in the FAQs and in related forms on the TALF website;
• The Fed updated its Borrower Due Diligence Policy and Conflicts of Interest Policy with specific guidelines and requirements, including with respect to due diligence on Material Investors and Control Persons of Borrowers, as well as the required contents of Conflicts of Interest Plans; and
• Operational subscription and closing mechanics have been provided, including detailed timing and delivery requirements for all parties.