May 12, 2020 / 6:27 PM / 23 days ago

Fed says applying conservative approach to including CLOs in TALF

WASHINGTON, May 12 (Reuters) - The Federal Reserve said on Tuesday it is applying conservative haircuts and other requirements for including collateralized loan obligations to its new Term Asset-Backed Securities Loan Facility.

The Fed published new details on the ABS it will accept as collateral for the program, one of several it has approved and plans to open in coming weeks in response to the coronavirus crisis. CLOs are a new addition to a program first used in the 2007 to 2009 financial crisis, and the Fed said it wanted to be sure it did not take overdue risk in lending against them.

Reporting by Howard Schneider, Editing by Franklin Paul

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