Pimco, the world’s largest bond fund, will manage the commercial-paper assets for the Federal Reserve as part of the government’s Commercial Paper Funding Facility programme, the Fed said Tuesday, reports the WSJ. State Street’s State Street Bank & Trust Co will serve as custodian and administrator, the Fed added. The CPFF will allow the government to backstop a market used by major corporations to fund day-to-day operations. From Oct 27, the scheme will fund purchases of commercial paper of three-month maturity from high-quality issuers until April 30, unless the scheme is extended. Unsecured commercial paper will be priced at the three-month overnight index swap rate plus one percentage point, with an additional percentage point surcharge. Asset-backed commercial paper will be priced at the OIS rate plus three percentage points. Meanwhile, Bernanke also said that new joint steps being taken by the Treasury, Fed and Federal Deposit Insurance Corp should help financial markets overcome the current crisis and pledged that officials “will not stand down” until stability is restored.

This entry was posted by Gwen Robinson on Wednesday, October 15th, 2008 at 5:46 and is filed under Capital markets. Tagged with pimco. Edit this entry.