Commercial Paper Contracts for 8th Week in a Row

Issuance lags as companies take advantage of low rates to sell longer debt.

The market for corporate borrowing through commercial paper contracted for an eighth week, reaching the lowest level in 21 months, as issuers reduced the amount of short-term IOUs and sold longer-dated corporate bonds, with yields at about record lows.

The seasonally adjusted amount of U.S. commercial paper dropped $19.2 billion to $924.4 billion outstanding in the week ended yesterday, the Federal Reserve said today on its website. That’s the longest stretch of declines in a year and the lowest level since the market touched $916.8 billion in the period ended Jan. 19, 2011, according to Fed data compiled by Bloomberg.

European Banks

The reduction in allocations by prime money market funds to European banks is another cause of the weakness in commercial- paper issuance, Crescenzi wrote.

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