NY Fed in talks with PIMCO on managing CP fund

NEW YORK (Reuters) - The Federal Reserve Bank of New York said on Wednesday that it is in discussions with PIMCO, the world's largest bond fund, regarding asset management services in support of the recently announced Commercial Paper Funding Facility.

The facility, known as the CPFF, aims to complement the Fed's existing credit facilities to help provide liquidity to term funding markets, the Fed said in a statement.

On Tuesday, the Fed announced a backstop measure that would create a special purpose vehicle to buy three-month commercial paper directly from eligible companies, which must have at least top A1/P1/F1 ratings.

The measure is expected to bring down the elevated lending rates in the market, and encourage other investors to lend for longer than just one day. Fed officials said it hoped the CPFF to be up and running in front of year-end funding pressures.

On Wednesday, the New York Fed said it has and will continue to consult with market participants on the operational aspects of the facility. The Fed declined further comment.

"PIMCO is honored to be considered for asset management services for the Commercial Paper Funding Facility," said Mark Porterfield, spokesman at PIMCO.

Pacific Investment Management Co, or PIMCO, a unit of German insurer Allianz (ALVG.DE), oversees more than $812 billion in assets.

(Reporting by Jennifer Ablan; Editing by Leslie Adler)