Conduits drew backup lines in CP market crunch

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By Owen Sanderson
08 Apr 2020

Banks sponsoring asset-backed commercial paper conduits activated the liquidity lines backing up these vehicles in the days before Federal Reserve intervention started to stabilise commercial paper markets, as rates spiked and investors focused on only the shortest maturities.

All the major ABCP vehicles are now “fully supported”, in contrast to the situation before the financial crisis of 2008, when banks had a tough choice over whether to step in and stand behind their partially supported vehicles once markets froze.

That means the conduit vehicle, while “off-balance ...

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