Dictionary

Commercial Paper - Security Type

 

From the Collaborative Bond and Money Market Data Portal.
 

In the Collaborative Bond and Money Market Data Model, the Commercial Paper classification appears within the field Security Type which is part of the universe of Bond and Money Market Instruments.
 

Definition:A Commercial Paper is a short term negotiable debt instrument that promises to pay the bearer or registered owner an amount or a number of amounts in the future.

 

Historically CPs are issued by corporate borrowers, but nowadays can also be issued by banks and sovereigns. Traditionally the instrument is not coupon bearing but zero coupon, issued at discount and maturing at par (100%). However, some Commercial Paper programmes also allow the issuance of coupon bearing and floating rate instruments. Typically the instrument is short term, up to one year, but can be longer, for example in some European domestic markets can easily be up to 2 or 3 years. 
 

As permitted by applicable securities laws, this instrument entitling the owner to one or more future cash flows, can be bought and sold to anyone. This negotiability distinguishes the instrument from a bilateral loan, where in theory you cannot sell the future cash-flows without the permission of payer.

 

The term Commercial Paper these days will typically mean that the instrument was issued under the legal terms and conditions of a Commercial Paper Programme.

 

In capital market data analysis it is therefore recommendable to look beyond the segmentation of markets by mere security type and instead focus on the actual term and structure of the instrument.  However, a distinction between CP, CD and Bills as instruments of the below 1 year money markets and Bonds, Notes and MTNs as instruments of the over 1 year bond markets seems fair.

 

Based on available data, on the 31st of March 2018, the size of the vanilla CP market in multiple currencies was the equivalent of USD672bn.

 

For information on issues in the Commercial Paper market, please use the Instrument search tool.

For information on the current size of the Commercial Paper market, please use the data sheet tool.

For information on the composition of the Commercial Paper market, please use the issuer search tool.

For information on active dealers in the Commercial Paper market, please use the dealer search tool.

For information on active investors in the Commercial Paper market, please use the fund search tool.
 

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