Whitbread accepted by BoE for commercial paper scheme

17th Apr 2020 07:05

(Sharecast News) - Whitbread said the Bank of England had agreed to buy its commercial paper if necessary to support the hotel group's liquidity during the Covid-19 crisis.
The FTSE 100 company said it had not yet issued any commercial paper under the programme, called the Covid corporate financing facility. Commercial paper is unsecured short-term debt that companies use for their immediate funding needs.

The Bank of England's website says Whitbread's Fitch rating of BBB/F2 makes the company eligible for up to £600m of support under the scheme. For primary market purchases companies with Whitbread's rating will pay 40 basis points more than the overnight index swap rate, the BoE said.



The owner of Premier Inn hotels said in addition to the BoE programme it had "accessible cash reserves of c.£400m and access to £900m of its existing committed revolving credit facility". The hotel sector has been severely affected by the economic shutdown to combat the spread of the virus, leaving companies short of cash.

The BoE announced on 17 March that it would buy commercial paper from large financially healthy companies to provide them with funding during the Covid-19 crisis. The BoE also bought commercial paper during the financial crisis.