本文发表在 rolia.net 枫下论坛By JON HILSENRATH and SERENA NG
U.S. officials are examining ways to ease deepening strains in the commercial paper market, which have been hit by an unwillingness among money market investors to hold risky assets.
The move could involve the Federal Reserve making an unusual foray into unsecured lending. The Fed has been flooding financial markets with loans in recent months, but those loans are secured by collateral.
In mid-September, the Fed unveiled a new lending program aimed at helping U.S. banks finance purchases of a kind of commercial paper called asset backed commercial paper, which is secured by collateral such as securities backed by mortgages or car loans.
The move was aimed at stabilizing money market funds that were being forced to dump illiquid or risky holdings as investors redeemed their money.
Some commercial paper brokers lamented that the Fed's backstop for the ABCP market may have at the same time reduced investor demand for unsecured commercial paper issued by many foreign banks and companies. So officials, who see strains in short-term funding markets as a dangerous development, are looking for ways to backstop this market, too.
"It doesn't matter if borrowers are offering to pay 2% or 8% for overnight cash; only the absolute safest, squeaky clean issuers have been able get financing" in the U.S. money markets in the last few weeks, said Ted Byrne, a trader at JM Lummis & Co., a brokerage in New Canaan, Conn.
Fed data showed that the U.S. commercial-paper market shrank a record $94.9 billion in the week ended Oct 1 to $1.61 trillion in outstanding debt, following a $61 billion decline the week before.
Most of the recent contractions were in commercial paper tied to financial companies in the U.S. and overseas; industrial corporations were less affected though some firms have had to pay higher interest rates to borrow in recent weeks.
The so-called unsecured commercial paper market for financial companies has contracted to $683 billion from over $835 billion in March this year. Its current size is comparable to what it was in early 2006.
Financial institutions are grappling with "a sharp pullback by investors, (and) also continues to experience a strong flight-to-liquidity," with lenders parting with cash for shorter and shorter periods, said J.P. Morgan research analysts in a report over the weekend.
Banks are being doubly slammed because they also rely on the market asset-backed commercial paper market, in which short-term debt is issued by vehicles that are financing longer-term holdings such as securities backed by residential mortgages, credit card loans and auto loans.
The U.S. ABCP market had shrunk to $725 billion last week from over $1 trillion at the end of 2006. J.P. Morgan estimates that European issuers account for over half of this market.
Write to Jon Hilsenrath at jon.hilsenrath@wsj.com and Serena Ng at serena.ng@wsj.com更多精彩文章及讨论，请光临枫下论坛 rolia.net
U.S. officials are examining ways to ease deepening strains in the commercial paper market, which have been hit by an unwillingness among money market investors to hold risky assets.
The move could involve the Federal Reserve making an unusual foray into unsecured lending. The Fed has been flooding financial markets with loans in recent months, but those loans are secured by collateral.
In mid-September, the Fed unveiled a new lending program aimed at helping U.S. banks finance purchases of a kind of commercial paper called asset backed commercial paper, which is secured by collateral such as securities backed by mortgages or car loans.
The move was aimed at stabilizing money market funds that were being forced to dump illiquid or risky holdings as investors redeemed their money.
Some commercial paper brokers lamented that the Fed's backstop for the ABCP market may have at the same time reduced investor demand for unsecured commercial paper issued by many foreign banks and companies. So officials, who see strains in short-term funding markets as a dangerous development, are looking for ways to backstop this market, too.
"It doesn't matter if borrowers are offering to pay 2% or 8% for overnight cash; only the absolute safest, squeaky clean issuers have been able get financing" in the U.S. money markets in the last few weeks, said Ted Byrne, a trader at JM Lummis & Co., a brokerage in New Canaan, Conn.
Fed data showed that the U.S. commercial-paper market shrank a record $94.9 billion in the week ended Oct 1 to $1.61 trillion in outstanding debt, following a $61 billion decline the week before.
Most of the recent contractions were in commercial paper tied to financial companies in the U.S. and overseas; industrial corporations were less affected though some firms have had to pay higher interest rates to borrow in recent weeks.
The so-called unsecured commercial paper market for financial companies has contracted to $683 billion from over $835 billion in March this year. Its current size is comparable to what it was in early 2006.
Financial institutions are grappling with "a sharp pullback by investors, (and) also continues to experience a strong flight-to-liquidity," with lenders parting with cash for shorter and shorter periods, said J.P. Morgan research analysts in a report over the weekend.
Banks are being doubly slammed because they also rely on the market asset-backed commercial paper market, in which short-term debt is issued by vehicles that are financing longer-term holdings such as securities backed by residential mortgages, credit card loans and auto loans.
The U.S. ABCP market had shrunk to $725 billion last week from over $1 trillion at the end of 2006. J.P. Morgan estimates that European issuers account for over half of this market.
Write to Jon Hilsenrath at jon.hilsenrath@wsj.com and Serena Ng at serena.ng@wsj.com更多精彩文章及讨论，请光临枫下论坛 rolia.net