Commercial paper market rate at 15.23 percent

The commercial paper market generally appears to be trending lower, contracting at a rate of 15.23% on a year-over-year basis to $932.60 billion, according to the Federal Reserve Bank. 

By , Guest blogger

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    This chart shows the annual percent change of the commercial paper market, essentially a private debt market used by corporations as a generally cheaper means of funding typical recurring operations.
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The Commercial Paper (CP) market is essentially a private debt market used by corporations as a generally cheaper means of funding typical recurring operations than drawing on a line of bank credit.

Commercial paper, as financial instrument, is by no means a recent innovation and, in fact, you can read about how the CP market was affected by the many historic financial shocks experienced by the U.S. (read Panic on Wall Street: A History of America’s Financial Disasters)

Although the Federal Reserve was able to artificially bring CP rates down significantly since the shocking 615 basis point spread blowout (A2/P2 spread) of late 2008, they had not been successful in preventing an overall contraction in the CP market.

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The Federal Reserve calculates and published the total amount of CP outstanding every week and as of mid-April commercial paper generally appears to be trending lower contracting at a rate of 15.23% on a year-over-year basis to $932.60 billion, a level that is still substantially lower than even the worst periods of the last two recessions.

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