COVID-19 Updates 5/20

China’s Refusal to Participate Fairly in U.S. Capital Markets

In the course of MFA’s recent outreach to Members of Congress, the theme of China’s refusal to participate fairly in U.S. capital markets has been recurring. Today, the U.S. Senate by unanimous consent, approved a China de-listing measure, the Holding Foreign Companies Accountable Act introduced by Senators John Kennedy (R-LA) and Chris Van Hollen (D-MD). The bill would prohibit the securities of a company from being listed on any U.S. exchange if that company has failed to comply with a Public Accounting Oversight Board (PCAOB) audit for three years in a row. Noteworthy is that this bill or some iteration thereof was introduced in 2019 and in previous congresses without action. Timing for House action is uncertain, but a companion measure was introduced by the Chair of the Financial Services Subcommittee on Capital Markets Brad Sherman (D-CA) today. 

Fed Emergency Facilities  

Today, the Fed released an updated Term Asset-Backed Securities Loan Facility (TALF) Frequently Asked Questions document as well as posting a Master Loan and Security Agreement setting June 17 as the initial subscription date for the TALF. For potential borrowers from TALF, a key issue of focus is how to interpret the Fed’s requirement to certify that there is a lack of adequate credit accommodations in the market, but the updated FAQs do not offer any new information in this regard. MFA will host a Credit Roundtable Videoconference tomorrow at 10:00 am ET to review TALF, the market collateralized loan obligations (CLO), and other credit-related topics.