Recent Examples of commercial paper from the Web
Domestic and foreign issuance of financial sector commercial paper has also shrunk in this time, indicating banks are tapping this channel for less funding.
Three-month financial commercial paper rates have risen by about 45 basis point this year, while the one-month maturity increased a fraction of that.
Prime money funds haven’t made their biggest cuts in holdings of commercial paper.
And bank lending grew apace after negative rates were introduced in January 2016 (see chart), even as firms have taken advantage of low borrowing costs to issue more of their own bonds and commercial paper.
Most money funds never buy commercial paper rated below the top rung of investment grade.
Many of the money-market funds are invested largely in bank certificates of deposits, commercial paper and government debt.
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First Known Use of commercial paper
Financial Definition of COMMERCIAL PAPER
What It Is
How It Works
Exempt from SEC registration, commercial paper generally matures in a short period of time and usually does not exist for more than 270 days. The average maturity of commercial paper is between 30 and 35 days. The average investment is about $100,000, but some commercial paper investments are made in multiples of $1 million or more. It is not uncommon for issuers to adjust the amounts and/or the maturities of commercial paper to suit the investment needs of a particular buyer or group of buyers.
Commercial paper is usually issued by companies with very high credit ratings. Because of this, and because it generally matures in a very short period of time, commercial paper tends to be a very low-risk investment. Most commercial paper is assessed by more than one rating agency. The four primary agencies are: Moody's, Standard & Poor's, Fitch, and Duff & Phelps.
Although commercial paper is occasionally issued as an interest-bearing note, it typically trades at a discount to its par value. In other words, investors usually purchase commercial paper below par and then receive its face value at maturity. The discount, or the difference between the purchase price and the face value of the note, is the interest received on the investment. All commercial paper interest rates are quoted on a discounted basis.
Why It Matters
Commercial paper is issued by a wide variety of domestic and foreign firms, including financial companies, banks, and industrial firms.
Major investors in commercial paper include money market mutual funds and commercial bank trust departments. These large institutional investors often prefer the cost savings inherent in using commercial paper instead of traditional bank loans.
Learn More about commercial paper
Britannica.com: Encyclopedia article about commercial paper
Seen and Heard
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