commercial paper


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commercial paper,

type of short-term negotiable instrument, usually an unsecured promissory note, that calls for the payment of money at a specified date. Because it is not backed by collateral, commercial paper is usually issued by major firms whose credit-rating is so good that their notes are immediately accepted for trading. The notes are sold at a discount and mature in from three to six months. Commercial paper is an important source of cash for the issuing firm; it supplements bank loans and is usually payable at a lower rate of interest than the prime discount rate. Strictly speaking, it includes only those instruments that are used in commerce in place of money, as distinguished from paper used in investment, personal, estate, speculative, and public transactions. In addition to promissory notes, commercial paper may include drafts, bills of exchange and checks, acceptances, bills of lading, warehouse receipts, orders for delivery of goods, and express orders. See. N. D. Baxter, The Commercial Paper Market (1969); Steve H. Nickles, Commercial Paper (1988).
References in periodicals archive ?
Commercial paper represents an important source of short-term funding for firms with very high credit ratings because it is one of the cheapest sources of external funding available.
After a few years of hesitant growth coming out of the recession of 1990, the commercial paper market grew robustly in the late 1990s.
Historically, commercial paper borrowing has usually expanded in the early stages of a recession and only started to decline when the economy was well-into recession.
In July, Los Angeles County raised $200 million on tax-exempt commercial paper with the flexibility to get another $100 million.
The county expects to finish paying off the commercial paper within eight to 10 years with the flexibility to extend payments up to 20 years, Sicotte said.
5 billion 364-day revolving-credit facility for general corporate purposes including a backup for commercial paper.
Finally, we also use 4(2) commercial paper in addition to 3a3.
3 million of general obligation bonds to repay four series of outstanding commercial paper notes issued in 1997 and 1998.
8 billion, including commercial paper balances of approximately $4.
Based on the current investment levels, which have been consistent over time, Vanderbilt would be able to fund the $299 million of outstanding variable-rate bonds and the full $675 million of commercial paper in the event that they were not able to be remarketed.
To limit Vanderbilt's exposure to the need for a significant liquidation of assets on any given day, the university has restricted the amount of commercial paper that may come due on any given day to $50 million.
If in the event AIG's ratings are lowered, based on current information, Fitch believes that ILFC's commercial paper rating would not go below 'F1'.

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