What is COMMERCIAL PAPER (CP)?

Shortterm, unsecured discount DEBT securities issued by highly rated financial companies (as FINANCIAL PAPER) and industrial companies (as INDUSTRIAL PAPER). Although most CP is unsecured, there is also a market for assetbacked CP and LETTER OF CREDITbacked CP. In the US market CP maturities range from overnight to 270 days, while in the EUROMARKETS maximum maturity may extend to 360 days; the most common maturities in both markets are in the 14 to 30 day sector. Most CP is issued via DEALERS in the form of BEARER SECURITIES, although issues of REGISTERED SECURITIES are possible. In the US market it is common for CP programs to be partially backed by SWINGLINES so that issuers can access funds in the event they are unable to roll over their maturing notes. See also EURO COMMERCIAL PAPER.

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