The seasonally adjusted amount of U.S. commercial paper declined $6.7 billion to $925.9 billion outstanding in the week ended yesterday, the third fall in four weeks, according to Federal Reserve data compiled by Bloomberg. That’s the largest decline since the market shrank $10.4 billion in the period ended Feb. 29 and the lowest level since reaching $925.6 billion outstanding on March 7, the data show.
Appetite from money-market funds has been curbed by concern that Europe’s sovereign debt strains will infect bank balance sheets. Italy’s borrowing costs rose at a sale of six-month bills today, while an index of euro-area economic confidence declined more than analysts forecast.
Commercial paper sold by U.S.-based banks contracted to the least in more than a year. That category dropped $9.7 billion to $258.8 billion outstanding, the biggest decrease this year and the lowest level since January 2011, according to the Fed. Commercial paper issued by non-U.S. financial institutions rose $1 billion to $162.5 billion outstanding, partially reversing the prior week’s $2 billion drop.
Corporations sell commercial paper, typically maturing in 270 days or less, to fund everyday activities such as paying rent and salaries.
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