Fed to Provide Commerical Paper Haven
THU: The Fed reported commercial paper outstanding tumbled $94.9 billion, or 5.6%, to a 3 year low of $1.6 trillion for the week ended Oct. 1.
The commercial paper market, which banks and U.S. corporations rely on for short-term borrowing,
has been frozen as investors flocked to the safety of Treasuries and are staying away from money market funds.
Today, The Fed said its new commercial paper funding facility (CPFF) would act as a liquidity backstop for U.S. issuers of commercial paper.
A new special-purpose vehicle (SPV) will be established to buy three-month unsecured and asset-backed commercial paper directly from eligible issuers.
The Nattering One muses... How much of this frozen commercial paper could the Fed buy? Under the unlimited buying powers in the bailout bill,
CP doesn't count towards the $700 billion, so the answer is...all $1.6 Trillion. Looks like the worlds largest pawn shop just got bigger, again.
The commercial paper market, which banks and U.S. corporations rely on for short-term borrowing,
has been frozen as investors flocked to the safety of Treasuries and are staying away from money market funds.
Today, The Fed said its new commercial paper funding facility (CPFF) would act as a liquidity backstop for U.S. issuers of commercial paper.
A new special-purpose vehicle (SPV) will be established to buy three-month unsecured and asset-backed commercial paper directly from eligible issuers.
The Nattering One muses... How much of this frozen commercial paper could the Fed buy? Under the unlimited buying powers in the bailout bill,
CP doesn't count towards the $700 billion, so the answer is...all $1.6 Trillion. Looks like the worlds largest pawn shop just got bigger, again.
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