Fed's Steps May Be Helping Commercial Paper

The U.S. commercial paper market shrank for the fifth consecutive week but the slowing pace of declines shows this market may be stabilizing as the Federal Reserve sets up a facility to support it.

Investors are not only returning to this market, which companies rely on for short-term expenses like rent and payrolls, they are also willing to lend for more than just one day, saving the issuers the trouble of constantly refinancing their debt.

Market participants expect further improvement once the Fed's commercial paper backstop is operational in two weeks, but there are still lingering doubts about whether enough companies will participate in the program to make it successful.

Read Full Article from Wall Street Journal

- Posted: 2008-10-16 15:57:46

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