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Federal Reserve: Commercial Paper Outstanding Rises By $10.7 Billion This Week | The Commercial Finance Blog

Federal Reserve: Commercial Paper Outstanding Rises By $10.7 Billion This Week

by LJ Miehe on August 6, 2009

Dow Jones, New York – The U.S. commercial paper market increased this week, reversing course after several weeks of declines, according to data released by the Federal Reserve Board on Thursday.  This week, the outstanding level went up by $10.7 billion, after a decline of $27.6 billion last week.

The asset-backed portion of this short-term market did fall, though, by $3 billion. Last week, this part of the market grew by $900 million on a seasonally adjusted basis, after shrinking by $4.6 billion in the prior week.

Last week’s decline was because of three-month paper maturing in the central bank’s facility set up to stabilize this market. Fewer companies have wanted to pay the Fed’s high rates, extended through the Commercial Paper Funding Facility.

The Fed’s holdings in the CPFF fell to $67.3 billion in the week ended July 29. At the end of 2008, the CPFF held about $334 billion.

The program was set up in October to provide short-term financing to U.S. companies that had been shut out of the commercial paper market. The funds are used to pay employees and landlords. The central bank kept its borrowing rates high so investors and issuers would interact with each other rather than lean on the Fed. Later Thursday, the Fed will say how much it holds in the program.

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