Federal Reserve Definition: Commercial paper (CP) in the US local market consists of short-term, promissory notes issued primarily by corporations. Maturities range up to 270 days but average about 30 days. Many companies use CP to raise cash needed for current transactions, and many find it to be a lower-cost alternative to bank loans.
Definition: US Commercial paper can mean either
1.a USD denominated short-term, promissory note issued up to 270 days in the US onshore market.
2.a USD denominated short term, promissory note issued up to 365 days in the US offshore market.
The 270 day limit comes from Section 3(a)(3) that exempts from Securities Act registration “any note, draft, bill of exchange, or banker’s acceptance” arising out of current transactions, with a maturity at issuance not exceeding nine months, exclusive of days of grace. For any paper issued over 270 days issuers can use Section 4(a)(2) and/or Rule 144A, which requires the issue to be privately placed and sold to sophisticated/accredited investors. from what we understand Section 4(a)(2) paper is often structured with maturities around 390 days, mostly driven by money market fund eligibility constraints.
Federal Reserve Definition: Commercial paper (CP) in the US local market consists of short-term, promissory notes issued primarily by corporations. Maturities range up to 270 days but average about 30 days. Many companies use CP to raise cash needed for current transactions, and many find it to be a lower-cost alternative to bank loans.
Data Model: In the CMDportal Collaborative Bond and Money Market Data Model US Commerclal Paper appears in the field Security Type with the attribute Commercial Paper and/or Certificate of Deposit in combination with the field Currency and the attribute USD.
Analysis: : Given the Fed's CP definition, we assume that all CP reported by the Fed is below 270 days. In the offshore market, financial institutions not only issue in CP but also in negotiable CD format. Our analysis for the offshore USD short term funding market therefore includes CDs. Instruments in the Onshore US Market typically have a CUSIP or ISIN that starts with US.Instruments in the Offshore US Market typically have an ISIN that does not starts with US.
