Until five years ago Japan's commercial paper market was off limits to nonbank financial companies.
Commercial banks would put up gold or commercial paper and get cash in return.
Buying up commercial paper straight from issuers basically puts the Fed in the commercial lending business.
Your money used to be backed by real things like gold and commercial paper.
Besides long term JGBs, the fund has bought commercial paper and Tokyo-listed ETFs and REITs.
There is the more recent example of commercial paper, a mechanism that blossomed in the 1960s.
Our central bank is now the U.S.' de facto commercial bank and our commercial paper market.
The next 40 pages explains some basic investments, like bonds, commercial paper and money market funds.
Even large companies, which can access the commercial paper and bond markets, are affected.
The effective coupon on this debt was less than commercial paper in most cases under 2%.
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Seemingly the safest of all securitised corporate lending is the market for commercial paper.
On January 22nd it announced expanded plans to buy commercial paper and even corporate bonds.
Five-year corporate bonds rated AA are yielding 4%, while commercial paper of comparable quality is good for only 1.7%.
Burned on Lehman debt, many money-market mutual funds have also stopped buying commercial paper.
He said today that the Fed would begin buying commercial paper in hopes of thawing credit markets.
Money market funds invest in short-term fixed-income securities or commercial paper from governments, financial institutions and corporations.
Last year, Orix obtained nearly half of its funding needs through direct sources like buyers of commercial paper.
This made such funds, in turn, an unreliable source of finance in repo, commercial paper and other markets.
Corporations sell commercial paper, a short-term IOU, to fund day-to-day activities like payroll.
In the aftermath, commercial paper was not banned or regulated out of existence.
Sharp can no longer sell commercial paper and is relying on bank financing.
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In 1993, the company began issuing commercial paper, a departure from the bank loans that traditionally funded Japanese companies.
Even solid borrowers that still are able to sell commercial paper and otherwise raise cash are preparing for the worst.
Then in 1970 came the staggering bankruptcy of the nation's largest railroad, Penn Central, a heavy user of commercial paper.
Then on Tuesday the Fed said it would create a special entity to buy commercial paper directly from eligible issuers.
Commercial paper, which enabled companies to raise short-term money at a cheaper rate by bypassing banks, proliferated in the 1960s.
Some of them were stupid enough to buy Fannie and Freddie preferred stock, Lehman's commercial paper, Washington Mutual's paper, also.
The move to loosen up the commercial paper market came after morning indications showed credit conditions remain under enormous strain.
The template is its September 19th announcement that it would finance banks' purchases of asset-backed commercial paper from money-market funds.
The hope is that investors will buy into this fund, and it will unfreeze the short-term asset-backed commercial paper market.
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