Cash Management

Commercial Paper Rates Hit New 4-year Low

For 30-day securities, it's now 1.74 percent, while 90-day paper falls to three-month low of 2.62 percent.
Stephen TaubNovember 4, 2008

The steady improvement of commercial paper interest rates continues, with a new four-year low having been achieved for 30-day securities.

Rates on the highest-ranked 30-day commercial paper fell 0.27 percentage point, to 1.74 percent, the lowest since Sept. 22, 2004, according to Bloomberg News. It also cited yields on 90-day paper that fell 0.06 of a percentage point, to a three-month low of 2.62 percent.

Further, the Fed set the 90-day commercial paper rate at 2.6 percent, down 0.01 of a percentage point, under its new Commercial Paper Funding Facility (CPFF).

Altogether, total commercial paper volume stood at $160 billion, according to the Federal Reserve. This was actually the third consecutive daily decline. What’s more, the total volume for 81 days or more fell to $19.90 billion from $45.43 billion on Friday.

Very short-term paper — one to four days — and paper whose maturities range between 21 and 80 days, showed slight increases in total volume.

Also, International Lease Finance Corp., a subsidiary of American International Group, said in a regulatory filing that it was approved to participate in the Fed’s CPFF, and issue up to $5.7 billion of commercial paper. As of Oct. 30 the company said it had issued about $1.7 billion, with proceeds going to repay certain intercompany loans from AIG.

Other companies registering with the CPFF include American Express Co., Chrysler Financial Corp., Ford Motor Credit Corp., GMAC LLC, General Electric Co., General Electric Capital Corp., Harley-Davidson Inc., Kookmin Bank, Korea Development Bank, Morgan Stanley, Prudential Financial Inc., and Torchmark Corp., according to Bloomberg.