Main Street Doesn’t Want Weird Loans

We talked yesterday about the Federal Reserve’s Primary Market Corporate Credit Facility, a program that the Fed launched on Monday to lend money to big investment-grade U.S. companies. I was skeptical that it will actually do much lending. “What, companies are going to fill out forms just to borrow a few tens of millions of dollars?” was the gist of my argument. The PMCCF requires a bunch of certifications; it asks issuers to include unusual provisions in their bond indentures or loan agreements with other investors, and to get those investors’ permission to give the Fed special treatment; it comes with various legal and administrative headaches. Also the investment-grade U.S. corporate bond market is absolutely white-hot right now, so companies can easily raise lots of cheap money the regular way instead of messing around with the Fed.

Today the Financial Times has a story about how the Fed’s Main Street Lending Program, which launched a few weeks ago and is intended to lend money to medium-sized U.S. companies, is not doing much lending: