CP experts welcome aid but want reassurance

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By Frank Jackman, Jon Hay
19 Mar 2020

Market participants have welcomed moves by the US Federal Reserve and Treasury, the Bank of England and the European Central Bank to restore order in commercial paper markets. This normally placid funding source has been under severe stress in the past week as investors and dealers shun risk amid the escalating coronavirus crisis. But market participants are still seeking further reassurance.

“It’s very dislocated,” said a securitization banker in Europe whose firm operates asset-backed CP programmes. "Monday was very difficult. Maturities have been shortened everywhere."

Among other assets, ABCP conduits finance companies by making loans secured on trade receivables. “It’s a day to day experience — people are taking more conservative ...

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