Opinion: Term Asset-Backed Securities Loan Facility 2.0 (“TALF”)

28 May 2020
Computer screen showing graph of improvement over time

The Term Asset-Backed Securities Loan Facility 2.0 (“TALF”) was announced by the US Federal Reserve as a response to the COVID-19 related distress in financial markets. The primary aim is to increase the flow of loans to consumers and businesses.

This creates an opportunity for UK pension funds to invest in TALF 2.0 vehicles – offering attractive returns for investing in AAA rated US Asset Backed Securities and using leverage from the Fed on favourable terms.

There are some considerations investors should take into account before making a commitment and these are detailed in the attached paper. This opportunity is unlikely to persist for very long as funds and capacity will be taken quickly.

 

Term Asset-Backed Securities Loan Facility 2.0