The U.S. commercial-paper market fell for a 13th week, the longest streak in at least a decade, as investors reduced holdings of financial debt on concern that Europe’s fiscal crisis may infect bank balance sheets.
Corporate borrowing through short-term IOUs fell $19.1 billion to $966.3 billion in the week ended Oct. 12 on a seasonally adjusted basis, the Federal Reserve said today on its website. That’s the lowest level since reaching $916.8 billion on Jan. 19, according to Fed data compiled by Bloomberg.
Borrowing by domestic financial institutions led the decline even as concern eased this week that turmoil in Europe will spread globally. U.S. money market funds are still shunning banks’ commercial paper, said Raymond Stone, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey.
“It is possible that some of the concern about contagion from Europe is influencing the perceived creditworthiness of the holding companies of the U.S. banks,” Stone said.
Commercial paper sold by domestic banks and financial firms fell $16.2 billion to $298.2 billion in the biggest decline since June 15. The amount issued by non-U.S. financial institutions decreased $2.1 billion to $177.1 billion, the sixth weekly decline and the lowest level in 13 months.
Corporations sell commercial paper to fund everyday activities such as paying payroll and rent. The weekly decline marks the longest stretch since at least December 2000, according to the Fed data.
Commercial paper issued by non-financial companies rose $1.1 billion to $185.1 billion, the Fed said. Domestic non-financial IOUs rose $800 million to $143.7 billion, the second weekly rise and the highest level in three weeks.