Nonfinancial Commercial Paper Rises to Most Since 2001, Fed Says

September 27, 2013 Leave a comment

Nonfinancial Commercial Paper Rises to Most Since 2001, Fed Says

The market for short-term IOUs by nonfinancial companies climbed to the highest mark in 12 years. The seasonally adjusted amount of commercial paper issued by the firms climbed $13 billion to $242.5 billion outstanding in the week ended yesterday, the highest level since June 2001, the Federal Reserve said today on its website. The central bank’s unprecedented economic stimulus measures pushed borrowing costs to record lows for debt issuers in May, spurring record offerings of dollar-denominated company bonds that have reached an all-time monthly high in September.“Short-term debt markets are functioning as normally as can be expected given the ongoing distortions of monetary policy,” Howard Simons, strategist at Bianco Research LLC in Chicago, wrote in an e-mail.

Nonfinancial commercial paper climbed to $223.8 billion in January 2009, a more than seven-year high, before plunging to $101.2 billion that December, according to Fed data compiled by Bloomberg.

Total U.S. commercial paper climbed $17.2 billion to $1.064 trillion outstanding in the period ended yesterday, the third straight increase, according to the Fed. That’s the highest level since the market touched $1.085 trillion for the period ended Feb. 13.

Corporations sell commercial paper, typically maturing in 270 days or less, to fund everyday activities such as rent and salaries.

To contact the reporter on this story: John Parry in New York at jparry5@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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