Commercial Papers

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NEHA V SHARDA

NEHA V SHARDA (Querist)
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23 May 2009 Will you please help me to know what are Commercial Papers(CPs)?

Deepak Agrawal

Deepak Agrawal (Expert)
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24 May 2009 In the global money market, commercial paper is an unsecured promissory note with a fixed maturity of one to 270 days. Commercial Paper is a money-market security issued (sold) by large banks and corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note. Since it is not backed by collateral, only firms with excellent credit ratings from a recognized rating agency will be able to sell their commercial paper at a reasonable price. Commercial paper is usually sold at a discount from face value, and carries shorter repayment dates than bonds. The longer the maturity on a note, the higher the interest rate the issuing institution must pay. Interest rates fluctuate with market conditions, but are typically lower than banks' rates.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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24 May 2009 Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.

It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers/ to diversify their
sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary
dealers and satellite dealers were also permitted to issue CP to enable them to meet their short-term funding
requirements for their operations.

https://www.cab.org.in/Lists/Knowledge%20Bank/Attachments/92/Commercial_Paper.pdf

NEHA V SHARDA

NEHA V SHARDA (Querist)
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23 June 2009 thanks..

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