Commercial paper outstanding fell for an 8th straight week, led by an
$11.4b drop in domestic financial CP outstanding. The main theme behind
the fall in this category has been the corporate decision to term out
one’s financing needs and rely less on the very short term funding
source of the commercial paper market. The FDIC’s Temporary Liquidity
Guarantee Program (TLGP) initiated back in October, provided a cheaper
way for financial co’s to sell up to 3 year debt that would be
government guaranteed, thus providing competitive, longer term (relative
to CP) financing. Those financials who want to be free from the TARP,
have been issuing non FDIC guaranteed debt with BAC the last one to do
so with a 10 yr issue back on May 28th.

Category: MacroNotes

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