Talk:Commercial paper

Needs Expert

I found one glaring error in the intro which I corrected (CP rates lower than bonds, not higher) and was the reason for the "Needs Expert" flag (since I am not an expert in this field). Can't some MBA or business student work on this and get credit? Andromedahpg (talk) 14:49, 12 May 2015 (UTC)

Math

$1.788T = $839B + $846B ? off by $103B also, in the breakdown of "this", $797B + $153B isn't equal to any of these numbers. —Preceding unsigned comment added by 71.32.46.111 (talk) 02:27, 9 October 2008 (UTC)

Yields Section

The first formula in the commercial paper yields section doesn't make any sense unless P_f is assumed to always be 1, in which case it should be written as 1, and the formulation is still unhelpful because it is a simplification that doesn't show where the equation comes from. I believe it should be i_CP(dy) = [(P_f - P₀)/P_f]•360/h

The second formula makes even less sense - P₀/P₀ will always be one regardless of the value, which is wrong. I believe it should be the same as the first formula, except replacing "360" with "365".

I've not actually studied commercial paper, which is why I was reading this page, just enough math to be able to derive formulas for interest rates on bonds, and to know that the ones here are wrong, so if someone who actually knows what they're doing could edit the article, that would be great. Further, without an explanation of the variables in the text of the article, these formulas will be completely unhelpful to a reader from the general public, so that should be added as well. 140.180.243.83 (talk) 08:24, 12 April 2015 (UTC)

Regarding Defaults

     When a firm that issues stocks and bonds goes bankrupt, the liquidated assets can be used to pay its debts. Normally, the bond holders are paid first, then the preferred stock holders, then the common stock holders. In what place in this order are the commercial paper holders paid? fx6893 11:27, 8 October 2008

As CP is a debt instrument, it must be paid off before the stocks, which are equity instruments. CP should go between bonds and preferred stocks. 65.42.26.190 (talk) 14:52, 9 March 2009 (UTC)

Please review this phrase

This phrase seems non-sequitir. Please confirm and rephrase/delete as appropriate. "While these fees may seem like pure profit for banks, if the company ever actually needs to use the line of credit it would likely be in serious trouble and have difficulty repaying its liabilities."

Obsolete instrument?

A lot of this article describes corporate CP which was traditionally what was meant by "CP" but more of the CP issued today is asset-backed, issued out of special-purpose vehicles backed by various financial assets, such as receivables, longer-term investment securities, etc. I don't know exactly how to bring this article more current. McTavidge 21:58, 2 April 2007 (UTC)

Commercial Paper is largely an obsolete form of financing. As you note above most corporate issues are asset-backed securities and instruments. Commercial paper has been out of fashion since at least the late 1990's. It was big for most of the 20th century, but tailed off as financial instruments required complex leveraging... Stevenmitchell 08:36, 4 April 2007 (UTC)

Agreed -- it's becoming obsolete as a way of corporations financing their operations, but as an asset class it's huge, it's just mostly asset-backed. McTavidge 03:34, 6 April 2007 (UTC)

It does not seem very obsolete: http://www.npr.org/templates/story/story.php?storyId=95099470 . Mlewan (talk) 10:45, 28 September 2008 (UTC)

Good link. The commercial paper market was $2.2 trillion in July 2007, Hardly "out of fashion." The market has shrunk to about $1.6 trillion in outstanding borrowing, as of October 7, 2008. From http://www.iht.com/articles/ap/2008/10/07/america/Meltdown-Commercial-Paper-Q-A.php Cuvtixo (talk) 14:54, 13 October 2008 (UTC)

Obsolete Information?

I am reading this article late in 2008. It quotes the amount of commercial paper in 1990. That is 18 years ago!!!! What is with that?!?!?

Someone with knowledge about what commercial paper is needs to update this. Nick Beeson (talk) 16:19, 7 October 2008 (UTC)

This market liked to keep a low profile, because commercial paper is exempt from registering with the Securities and Exchange Commission, which helps keep borrowing costs low. Interest rates fluctuate with market conditions, but are typically lower than banks' rates. I think its unlikely that someone who already knows CP will update this, what needs to happen is some Wikipedians will have to START learning about it. Cuvtixo (talk) 15:04, 13 October 2008 (UTC)

Agree that this article is out of date as I am reading it in May 2015 Andromedahpg (talk) 14:49, 12 May 2015 (UTC)

Global application

It would be good to have a section about how much or little commercial papers or their equivalents are used in other markets. With wikis in other languages as almost only source, I conclude the following:

• Germany: CP mentioned using the English word. According to this stock exchange dictionary the concept is used in Germany as well.
• France: The French term Billet de trésorerie is used. They work in a somewhat different way to the American CP, but there are also similarities. They were based on the American model when introduced 1985. France has the third biggest activity in the world of this kind - the biggest one in Europe.
• Netherlands: The English word is used, and it seems to apply to the Netherlands as well, as they specify that the amounts have to be larger than EUR 500.000.
• Italy: The English word is used. The activity with commercial papers in Italy is very limited.
• Polish: The English word is used. It is not explicitly mentioned in which markets it applies.
• Slovak: The local word Cenný papier is used. Some kind of CP seems to be used in Slovakia, but the details are not clear.

I do not read any Indonesian or Korean, so I cannot comment on those versions. Mlewan (talk) 15:34, 13 October 2008 (UTC)

Point well-taken, Mlewan! I added a reference to the global money market, where commercial paper is traded by institutions from all over the world. I will, as I'm able, add specific references to the European capital markets you mention. Cheers! Walshga (talk) 14:36, 14 October 2008 (UTC)

Educational assignment at Symbiosis School of Economics supported by Wikipedia ambassadors

Basic.atari(talk) 02:30, 10 August 2011 (UTC)

Bibliography

• Reserve Bank of India (10 October 2000). "Guidelines for issue of Commercial Paper" (PDF). Retrieved 21 August 2011.
• Bhole, L.M. (1999). Financial Institutions and Markets. New Delhi: Tata McGraw Hill Publishing Company Ltd..

— Preceding unsigned comment added by Basic.atari (talk • contribs) 15:01, 17 August 2011 (UTC)

Commercial paper has several different flavors and competes against overdraft (lines of credit). It has had a checkered history, diminishing in use (discounting of bills of exchange) in England in mid-20th c (see Radcliffe Report) and then reviving later. The analytic problem is that commercial paper and other types of markets (such as repo markets) are broadly speaking very similar. The "hair cut" in repo transaction is very similar to the "discount rate" applied to commercial paper. Some commercial paper is asset backed and some not. gn842 — Preceding unsigned comment added by Gn842 (talk • contribs) 21:11, 29 January 2013 (UTC)

Sentence in Overview section is unclear.

The first sentence in the Overview section is not a complete sentence and the intent of the author is unclear. The sentence in question is the following.

As defined by Article Four of the Uniform Commercial Code, a set of non-federal business laws adopted by all 50 U.S. States except Louisiana.

Thisisdavid (talk) 18:04, 20 December 2012 (UTC)

Euro Commercial Paper

Hi There. This is a major international market that is not presently covered in the article, and it is a serious omission. Could we consider doing something about this? I did some digging and found the following public data page http://www.cmdportal.com/Public/Data.aspx

johnjohn — Preceding undated comment added 10:25, 11 July 2014 (UTC)

Doesn't look like a reliable source, but then this has already been pointed out. --Ronz (talk) 15:52, 12 July 2014 (UTC)

Ronz This is a fairly reputable source for international money market and fixed income data.

Please see the following:

• http://www.fixed-income.org/index.php?id=30&tx_ttnews[tt_news]=4056&tx_ttnews[pointer]=254&cHash=b0ae4ec3b3d571ce40cf732f110ebeb1 (COPY WHOLE URL)
• http://www.ftseglobalmarkets.com/issues/issue-75-february-march-2014/investors-looks-to-real-assets.html
• http://www.corporatefinancingweek.com/corporate-financing-analysis-bank-first-resort-hitting-covered-bonds-hard-2013-12-aug-2013

--Johnjohn mac (talk) 15:43, 16 July 2014 (UTC)

Guys - I'd like to go ahead and cite these figures for Euro Commercial Paper. Please let me know know if there is any feedback. Ronz, feedback?

Thanks for clarifying. I'll take a look. --Ronz (talk) 17:19, 17 July 2014 (UTC)

The first two reference CMDPortal, the third is from CMDPortal. --Ronz (talk) 18:47, 17 July 2014 (UTC)

Are there organizations similar to those cited in the section (the Ontario Securities Commission and the Federal Reserve) that could be used instead? --Ronz (talk) 18:59, 17 July 2014 (UTC)

Ronz As far as I know, CMD has the most complete statistics on the Euro Commercial Paper market. Other pages that I've looked at examine only certain segments. In terms of notability, I also managed to dig up the following reference:

http://www.bis.org/publ/bcbs165/ecpc.pdf

This is a letter written to the BIS (Bank for International Settlements) by the ICMA ECP Committe (the largest umbrella body of ECP dealers and market makers). Within this document you will find a reference to "Capital Market Daily (CMD)" - mentioning them as a CP data provider. This really should be enough....--Johnjohn mac (talk) 08:35, 18 July 2014 (UTC)

"CMD can access and search and sort data real time on a trade-by-trade basis" --Johnjohn mac (talk) 08:37, 18 July 2014 (UTC)

I think it would be best to use an organization with similar status and responsibilities as the Ontario Securities Commission and the Federal Reserve. --Ronz (talk) 16:21, 18 July 2014 (UTC)

Ronz I understand your view on this - however there appears to be no similar data aggregation process for ECP outside private market data providers. The ECP market spans many different geographies and currencies, so there is a problem in trying to find similar "official" organisations as is the case with national markets. It is for this reason that I'm suggesting CMD as a source - as their public data page is fairly comprehensive and they have also been cited by the ICMA for their work. We thus have the data from a reputable source - enough to really build on the very limited scope of this current article. It would be a real shame not to go ahead --Johnjohn mac (talk) 21:04, 18 July 2014 (UTC)

btw...there is a wikipedia page for the ICMA in case you want to look at this further https://en.wiki.x.io/wiki/ICMA . --Johnjohn mac (talk) 21:08, 18 July 2014 (UTC)

Then it might be WP:UNDUE (and WP:SOAP) to provide similar detail to what is sourced by the Ontario Securities Commission and the Federal Reserve. --Ronz (talk) 23:50, 18 July 2014 (UTC)

I really don't see how one gets to the conclusion of "undue weight" given that we would simply be quoting figures from a source that has proven to be reliable and there is no opinion involved - it is a purely factual exercise for which the available data is being used. There is no comparable "Fed" source for this - hence the rational argument is clear that we go ahead with these figures. I hope this clears up your objections - which I've dealt with in good faith and conscience. Once again - there is no similar resource available for ECP since it is an international market. --Johnjohn mac (talk) 11:24, 19 July 2014 (UTC)

I've voiced my objections. Wish you hadn't placed the material back while under discussion. It's bad form in general, inappropriate if you have a WP:COI.

When a better reference is found, CMDPortal's should be replaced. --Ronz (talk) 15:38, 19 July 2014 (UTC)

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