Connect with us


What Is Commercial Paper? Definition, Purpose & History

What Is Commercial Paper?Commercial paper is a type of debt issued by a company that can serve as a source of funding for its operations. Money raised…



Commercial paper is a type of unsecured debt that businesses issue to raise funds because they tend to be a cheaper form of borrowing than bank loans.


What Is Commercial Paper?

Commercial paper is a type of debt issued by a company that can serve as a source of funding for its operations. Money raised from commercial paper can be used to meet short-term needs, such as payroll, inventory finance, or payment for raw materials. Companies often prefer commercial paper to bank loans, which tend to carry higher interest rates.

Commercial paper is a type of unsecured debt, which means it isn’t backed by assets or other types of collateral. Instead, issuers have lines of credit from banks to back the debt. Just as a person’s eligibility for a credit card is based on their credit score, a company’s ability to issue commercial paper is based on its creditworthiness.

In the commercial paper market, the company issuing the debt is usually perceived to be low risk. Still, ratings agencies such as Moody’s and Fitch issue credit ratings on the commercial paper to be sold as a measure of potential investment for prospective buyers. The typical issuer of commercial paper is a large corporation with a strong credit rating.

How Long Does Commercial Paper Take to Mature?

Commercial paper can have a maturity as short as overnight or as long as 270 days. The duration is significant because any debt with a maturity exceeding 270 days must be registered with the Securities and Exchange Commission (SEC). So, a company issuing millions of dollars in commercial paper doesn’t have to face the scrutiny of the SEC if their debt matures in 270 days or fewer. Since commercial paper has a duration of less than a year, it is recognized as a liquid asset.

The average duration of a commercial paper is 30 days, according to the Federal Reserve. That being said, it is common for companies to roll over their commercial paper when they are due by issuing new paper.

A Brief History of Commercial Paper

Commercial paper reportedly originated in the U.S. in the 1700s, and its widespread use as a debt facility gained traction in the 1800s when businesses—typically requiring funds for inventory—started issuing promissory notes on paper.

Investment banking giant Goldman Sachs traces its origin and prominence in the commercial paper market to founder Marcus Goldman, who first sold promissory notes in 1869. He built up relations with small business owners such as wholesale jewelers and leather merchants in Lower Manhattan and helped them issue commercial paper based on their creditworthiness.

In the first year of operations, as an intermediary between borrowers and institutional lenders, he led transactions totaling $5 million (the equivalent of $111 million in 2023). In the 1970s, Goldman Sachs was the biggest dealer in the U.S. commercial paper market.

While commercial paper is largely unsecured debt, some corporations use assets—such as receivables—as collateral, and this is known as asset-backed commercial paper (ABCP). It typically has maturity durations of 90 to 180 days. Transactions of ABCPs picked up in the 1990s, and these helped to push the value of the U.S. commercial paper market up to a record $2.2 trillion in July 2007.

Transactions for ABCPs declined during the financial crisis of 2007–2008 because ABCPs were used to fund longer-term asset-backed securities, of which their credit ratings were questionable, and issuers had difficulty rolling over their debt as the market for those securities collapsed. The Federal Reserve Board temporarily set up a commercial paper funding facility (CPFF) on October 27, 2008, to address liquidity concerns by buying commercial paper.

Fed data showed that the outstanding value of U.S. commercial paper exceeded $1.25 trillion at the end of 2022. (In comparison, the total value of the U.S. debt market was about $30 trillion.) Still, the commercial paper market is up from about $951 million in late 2020, during the height of the COVID-19 pandemic. The Fed for the second time opened up the CPFF on March 17, 2020, for the purchase of commercial paper during the pandemic. This was a way to keep money flowing into the economy by allowing companies that might be distressed to raise funds. The CPFF stopped buying commercial paper a year later.

Who Are the Important Participants in the Commercial Paper Market?

There are generally three major players in the commercial paper market: those who issue, those who purchase, and those who deal.


These are corporations and financial institutions. Typically, the bulk of commercial paper issuance comes from banks and finance companies that are raising funds. Sovereign governments also sell commercial paper from time to time.


Investors include mutual funds, foreign corporations, pension funds, and state and local governments that seek to diversify their holdings.


Typically, the biggest investment banks and securities firms deal the commercial paper because they have clients who both sides of the transaction: buyers and sellers. There is no official list of commercial paper dealers as there is for primary dealers of government debt. When the Fed set up the CPFF, most of the commercial dealers listed were also primary dealers.

How Is Commercial Paper Issued, Sold, Purchased & Redeemed?

A company seeking to sell commercial paper does so through a dealer that serves as an intermediary between it and the dealer’s clients, the buyers. For example, an automobile manufacturer wants to raise $50 million to pay bonuses to management on what is expected to be a record quarter in sales. It can’t get money quick enough, so the automaker turns to commercial paper for immediate funding and wants to pay the face value of the paper in 90 days. A dealer works with the issuer to set the discount rate and finds buyers. Investors buy the commercial paper but must wait 90 days to receive their money back, with interest.

The dealer makes money from the transaction by buying the commercial paper from the debtor and selling it at a higher price to investors, pocketing the difference. Thus, commercial paper rates tend to be a bit higher than Treasuries with similar maturities to account for the dealer’s profit.

Commercial paper works like fixed-income investments but tends to have rates higher than Treasuries with similar maturities, and even higher than bank savings deposit rates.

How Are Interest Rates on Commercial Paper Calculated?

When a company issues commercial paper that is due, for example, in 270 days, the company agrees to pay back the face value at the end of 270 days. It sells the commercial paper at a discount, or below par value, and it buys the paper back at face value. The difference is the interest earned by the investor (and the price paid by the issuer for the temporary use of the buyer’s funds).

What Are the Differences in Commercial Paper Internationally?

The U.S. has the biggest market in commercial paper, and is designated abroad as U.S. commercial paper (USCP). While other countries may have their own commercial paper market, commercial paper issued internationally is known as Eurocommercial paper (ECP), but the debt can be in any currency denomination. The other big markets for commercial paper are in Canada and the U.K.

Eurocommercial doesn't face the scrutiny of the SEC and isn’t limited by the 270-day maturity duration that would trigger oversight. Typically, the length of maturity for Eurocommercial paper can be as long as 364 days, or less than a year.

Frequently Asked Questions (FAQ)

The following are answers to some of the most common questions investors ask about commercial paper.

What Are the Differences Between Commercial Paper and Bonds?

Unlike bonds, which can be redeemed at any time, investors in commercial paper must wait to be paid out at maturity. Like most types of bonds, taxes must be paid on any interest earned.

Who Are the Biggest Issuers of Commercial Paper?

Banks and finance companies are among the biggest issuers of commercial paper.

Who Are the Biggest Holders of Commercial Paper?

Money market mutual funds, corporations, and state and local governments are among the biggest holders of commercial paper.

What Is Asset-Backed Commercial Paper?

Some companies use assets as collateral for their commercial paper offerings, and this is known as asset-backed commercial paper. Its maturity durations are typically 90 to 180 days.

What Is Credit-Supported Commercial Paper?

Credit-supported commercial paper is typically backed by a bank, which agrees to pay the face value of the debt if the issuer does not. 

Read More

Continue Reading


China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

Retail sales of passenger vehicles scorched higher in May,…



China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

Retail sales of passenger vehicles scorched higher in May, with 1.76 million units sold, according to preliminary data from the China Passenger Car Association released this week. 

The sales figure represents 8% growth from the month prior. As has been the case over the last several years, new energy vehicles continue to grow disproportionately to the rest of the sector, driving sales higher.

Last month 557,000 NEVs were sold, growth of 55% year over year and 6% sequentially, according to a Bloomberg wrap up of the data. 

The sales boost comes as the country slashed prices to move metal throughout the first 5 months of the year. In late May we noted that China's auto industry association was urging automakers to "cool" the hype behind price cuts that were sweeping across the country. 

The price cuts were getting so egregious that the China Association of Automobile Manufacturers went so far as to put out a message on its official WeChat account, stating that "a price war is not a long-term solution". Instead "automakers should work harder on technology and branding," it said at the time.

Recall we wrote in May that most major automakers were slashing prices in China. The move is coming after lifting pandemic controls failed to spur significant demand in China, the Wall Street Journal reported last month. Ford and GM will be joined by BMW and Volkswagen in offering the discounts and promotions on EVs, the report says. 

At the time, Ford was offering $6,000 off its Mustang Mach-E, putting the standard version of its EV at just $31,000. In April, prior to the discounts, only 84 of the vehicles were sold, compared to 1,500 sales in December. There was some pulling forward of demand due to the phasing out of subsidies heading into the new year, and Ford had also cut prices by about 9% in December. 

A spokesperson for Ford called it a "stock clearance" at the time. 

Discounts at Volkswagen ranged from around $2,200 to $7,300 a car. Its electric ID series is seeing price cuts of almost $6,000. The company called the cuts "temporary promotions due to general reluctance among car buyers, the new emissions rule and discounts offered by competitors."

China followed suit, and thus, now we have the sales numbers to prove it...

Tyler Durden Wed, 06/07/2023 - 20:00

Read More

Continue Reading


World Bank: Global Economic Growth Expected To Slow To 2008 Levels

World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream…



World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream concede that the economy is heading for a recession, but the consensus seems to be that downturn will be short and shallow. Projections by the World Bank undercut that optimism.

According to the World Bank, global growth in 2023 will slow to the lowest level since the 2008 financial crisis.

In other words, the World Bank is predicting the beginning of Great Recession 2.0.

You might recall that the Great Recession was neither short nor shallow.

In fact, World Bank Group chief economist and senior vice president Indermit Gill said, “The world economy is in a precarious position.”

According to the World Bank’s new Global Economic Prospects report, global growth is projected to decelerate to 2.1% this year, falling from 3.1% in 2022. The bank forecasts a significant slowdown during the last half of this year.

That would match the global growth rate during the 2008 financial crisis.

According to the World Bank, higher interest rates, inflation, and more restrictive credit conditions will drive the economic downturn.

The report forecasts that growth in advanced economies will slow from 2.6% in 2022 to 0.7% this year and remain weak in 2024.

Emerging market economies will feel significant pain from the economic slowdown. Yahoo Finance reported, “Higher interest rates are a problem for emerging markets, which already were reeling from the overlapping shocks of the pandemic and the Russian invasion of Ukraine. They make it harder for those economies to service debt loans denominated in US dollars.”

The World Bank report paints a bleak picture.

The world economy remains hobbled. Besieged by high inflation, tight global financial markets, and record debt levels, many countries are simply growing poorer.”

Absent from the World Bank analysis is any mention of how more than a decade of artificially low interest rates and trillions of dollars in quantitative easing by central banks created the wave of inflation that continues to sweep the globe, along with massive levels of debt and all kinds of economic bubbles.

If you listen to the mainstream narrative, you would think inflation just came out of nowhere, and central banks are innocent victims nobly struggling to save the day by raising interest rates. Pundits fret about rising rates but never mention that rates were only so low for so long because of the actions of central banks. And they seem oblivious to the consequences of those policies.

But being oblivious doesn’t shield you from the impact of those consequences.

In reality, central banks and governments implemented policies intended to incentivize the accumulation of debt. They created trillions of dollars out of thin air and showered the world with stimulus, unleashing the inflation monster. And now they’re trying to battle the dragon they set loose by raising interest rates. This will inevitably pop the bubble they intentionally blew up. That’s why the World Bank is forecasting Great Recession-era growth. All of this was entirely predictable.

After all, artificially low interest rates are the mother’s milk of a global economy built on easy money and debt. When you take away the milk, the baby gets hungry. That’s what’s happening today. With interest rates rising, the bubbles are starting to pop.

And it’s probably going to be much worse than most people realize. There are more malinvestments, more debt, and more bubbles in the global economy today than there were in 2008. There is every reason to believe the bust will be much worse today than it was then.

In other words, you can strike “short” and “shallow” from your recession vocabulary.

Even the World Bank is hinting at this.

Tyler Durden Wed, 06/07/2023 - 15:20

Read More

Continue Reading


DNAmFitAge: Biological age indicator incorporating physical fitness

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”…



“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

Credit: 2023 McGreevy et al.

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

BUFFALO, NY- June 7, 2023 – A new research paper was published in Aging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 15, Issue 10, entitled, “DNAmFitAge: biological age indicator incorporating physical fitness.”

Physical fitness is a well-known correlate of health and the aging process and DNA methylation (DNAm) data can capture aging via epigenetic clocks. However, current epigenetic clocks did not yet use measures of mobility, strength, lung, or endurance fitness in their construction. 

In this new study, researchers Kristen M. McGreevy, Zsolt Radak, Ferenc Torma, Matyas Jokai, Ake T. Lu, Daniel W. Belsky, Alexandra Binder, Riccardo E. Marioni, Luigi Ferrucci, Ewelina Pośpiech, Wojciech Branicki, Andrzej Ossowski, Aneta Sitek, Magdalena Spólnicka, Laura M. Raffield, Alex P. Reiner, Simon Cox, Michael Kobor, David L. Corcoran, and Steve Horvath from the University of California Los Angeles, University of Physical Education, Altos Labs, Columbia University Mailman School of Public Health, University of Hawaii, University of Edinburgh, National Institute on Aging, Jagiellonian University, Pomeranian Medical University in Szczecin, University of Łódź, Central Forensic Laboratory of the Police in Warsaw, Poland, University of North Carolina at Chapel Hill, University of Washington, and University of British Columbia develop blood-based DNAm biomarkers for fitness parameters including gait speed (walking speed), maximum handgrip strength, forced expiratory volume in one second (FEV1), and maximal oxygen uptake (VO2max) which have modest correlation with fitness parameters in five large-scale validation datasets (average r between 0.16–0.48). 

“These parameters were chosen because handgrip strength and VO2max provide insight into the two main categories of fitness: strength and endurance [23], and gait speed and FEV1 provide insight into fitness-related organ function: mobility and lung function [8, 24].”

The researchers then used these DNAm fitness parameter biomarkers with DNAmGrimAge, a DNAm mortality risk estimate, to construct DNAmFitAge, a new biological age indicator that incorporates physical fitness. DNAmFitAge was associated with low-intermediate physical activity levels across validation datasets (p = 6.4E-13), and younger/fitter DNAmFitAge corresponds to stronger DNAm fitness parameters in both males and females. 

DNAmFitAge was lower (p = 0.046) and DNAmVO2max is higher (p = 0.023) in male body builders compared to controls. Physically fit people had a younger DNAmFitAge and experienced better age-related outcomes: lower mortality risk (p = 7.2E-51), coronary heart disease risk (p = 2.6E-8), and increased disease-free status (p = 1.1E-7). These new DNAm biomarkers provide researchers a new method to incorporate physical fitness into epigenetic clocks.

“Our newly constructed DNAm biomarkers and DNAmFitAge provide researchers and physicians a new method to incorporate physical fitness into epigenetic clocks and emphasizes the effect lifestyle has on the aging methylome.”

Read the full study: DOI: 

Corresponding Authors: Kristen M. McGreevy, Zsolt Radak, Steve Horvath

Corresponding Emails:,, 

Keywords: epigenetics, aging, physical fitness, biological age, DNA methylation

Sign up for free Altmetric alerts about this article:


About Aging-US:

Launched in 2009, Aging publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

Please visit our website at​​ and connect with us:

  • SoundCloud
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • LabTube
  • LinkedIn
  • Reddit
  • Pinterest


Click here to subscribe to Aging publication updates.

For media inquiries, please contact


Aging (Aging-US) Journal Office

6666 E. Quaker Str., Suite 1B

Orchard Park, NY 14127

Phone: 1-800-922-0957, option 1


Read More

Continue Reading