Chapter Six
Asset-Backed Commercial Paper
THE MARKET for asset-backed commercial paper (ABCP) has ballooned in recent years. From $40.7 billion, or 7.5 percent of the total commercial paper (CP) market, in March 1992, it grew to $728.3 billion, or 53.8 percent of that market, by March 2003. Growth in ABCP reflects the fact that this vehicle offers companies access to the prime CP market at better terms than they can attain by issuing CP directly from their own balance sheets. Advantages in using the ABCP market extend beyond lower interest rates and include the opportunity for diversification of funding sources that can act as a cushion against credit downgrades or marginal increase in the cost of on-balance-sheet CP. In addition, ABCP offers ...
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