Oct. 17 (Bloomberg) -- Rates for one-month commercial paper fell to a three-week low after central banks joined forces to pump cash into money markets and governments backed loans.

Average yields offered on the highest-rated commercial paper placed by dealers and due in 30 days fell 0.48 percentage point today to 3.45 percent, according to data compiled by Bloomberg. Rates fell 0.83 percentage point this week to the lowest since Sept. 26 from a nine-month high of 4.28 percent.

Rates fell after central banks worldwide offered lenders an unlimited supply of dollars and the European Central Bank did the same with euros. Investors who had forced many companies to roll over commercial paper daily began buying more longer-date short- term debt.

``The infusion of capital by the government into the banking system should improve balance sheet health greatly and gradually, make unsecured lenders more comfortable,'' Barclays Plc analysts Piyush Goyal and Kurush Mistry said yesterday in a report.

Commercial paper, which typically matures in 270 days or less, is used by companies to finance payroll, rent and other daily expenses.

About 15 percent of commercial paper sold this week through Oct. 16 matures in more than 20 days, compared with an average of 8.5 percent in the previous four weeks, according to Federal Reserve data. The amount issued that comes due in one to four days fell to 73 percent from 82 percent from Sept. 15 through Oct. 10.

Money Markets

Money-market investors began balking at buying debt due longer than overnight after Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15. That prompted the U.S. government to create a program last week to buy the three-month commercial paper to provide a liquidity backstop for companies.

The commercial paper market slumped $40.3 billion to $1.51 trillion in the week ended Oct. 15, the fifth-straight decline, bringing the total contraction since Sept. 11 to $304.7 billion, Fed data show. Financial-company commercial paper outstanding has plunged $210.6 billion to $604.9 billion.

Commercial paper due in 30 days on average yields 1.95 percentage points more than the Fed target lending rate, down from a record 2.78 percentage points on Oct. 10, Bloomberg data show. The gap was a few basis points before short-term credit markets first seized up in August 2007.

To contact the reporter on this story: Bryan Keogh in New York at bkeogh4@bloomberg.net

Last Updated: October 17, 2008 15:12 EDT