short-term unsecured loan of a financially strong company having a maturity up to 270 days. It is typically issued on a discount basis meaning that the interest is subtracted immediately from the face of the debt to obtain the cash proceeds. Commercial paper interest rates are usually less than the prime interest rate (rate charged by banks to their best customers). Flexibility is another advantage; they can be issued at varying maturity dates when funds are needed.
short-term promissory note, or unsecured money market obligation, issued by prime rated commercial firms and financial companies, with maturities from 2 days up to 270 days. The most active market is in issues under 30 days.
Most commercial paper rates are quoted on a discount basis, although some paper is interest-bearing. Issuers market their paper through dealers, or alternatively through direct placement with an investor. Commercial paper is rated by debt rating agencies and generally is backed by a bank line of creditSecondary market sales are limited, as issuers are able to closely match the maturity needs of investors.
short-term obligations with maturities ranging from 2 to 270 days, issued by banks, corporations, and other borrowers to investors with temporarily idle cash. Such instruments are unsecured and usually discounted, although some are interest-bearing. They can be issued directly or through brokers equipped to handle the enormous clerical volume involved. Issuers like commercial paper because the maturities are flexible and because the rates are usually marginally lower than bank rates. Investors- actually lenders, since commercial paper is a form of debt-like the flexibility and safety of an instrument that is issued only by top-rated concerns and is nearly always backed by bank lines of credit.
short-term obligations with maturities ranging from 2 to 270 days issued by banks, corporations, and other borrowers to investors with temporarily idle cash. Such instruments are unsecured and usually discounted, although some are interest-bearing. They can be issued directly-direct issuers do it that way-or through brokers equipped to handle the enormous clerical volume involved. Issuers like commercial paper because the maturities are flexible and because the rates are usually marginally lower than bank rates. Investors-actually lenders, since commercial paper is a form of debt-like the flexibility and safety of an instrument that is issued only by top-rated concerns and is nearly always backed by bank lines of credit. Both Moody's and Standard & Poor's assign ratings to commercial paper.
