Commercial Paper Market in U.S. Expands for 12th Week, Fed Says

The market for corporate borrowing through commercial paper expanded for a 12th week as non- financial short-term IOUs rose to the highest level in four years.

The seasonally adjusted amount of U.S. commercial paper advanced $27.8 billion to $1.133 trillion outstanding in the week ended yesterday, the Federal Reserve said today on its website. That’s the longest stretch of increases since the period ended July 25, 2007, and the most since the market touched $1.147 trillion on Aug. 17, 2011.

“We’re seeing in general short-term business demand for credit rise, and this seems to be an artifact of the inventory building that we’ve seen over time,” Raymond Stone, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey, said in a telephone interview.

Corporations sell commercial paper, typically maturing in 270 days or less, to fund everyday activities such as rent and salaries. Business inventories in the U.S. rose in November at the same pace as a month earlier as companies kept stockpiles in line with improving demand.

Short-term IOUs issued by non-financial companies climbed $5.7 billion to $220.5 billion, the highest level since the period ended Jan. 7, 2009, the Fed said.

Commercial paper sold by non-U.S. financial institutions increased $5.5 billion to $251.9 billion outstanding, the most since July 2011, while the amount issued by U.S.-based banks climbed $12.2 billion to $339.9 billion outstanding, the fourth rise, according to the Fed.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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